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Supreme Court order not good for recovery of telecom sector, says ICRA

Our Bureau New Delhi | Updated on July 23, 2021

‘The industry is already saddled with high debt and very low tariffs’

The Supreme Court (SC) quashing the adjusted gross revenue (AGR) penalty re-computation by the telcos, would not go well for the recovery of telecom sector, said ICRA on Friday.

A Bench headed by Justice LN Rao referred to the earlier order passed by the apex court in the matter and observed that no re-assessment of AGR-related dues could be done.

In its September 2020 order, the SC had said that the telecom service providers (TSPs) should pay 10 per cent of the total dues amounting to ₹93,520 crore demanded by the Department of Telecommunications (DoT) of the AGR-related dues in yearly instalments in the next 10 years (between April 2021 and March 31, 2031).

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The apex court had, in October 2019, delivered its verdict on the AGR issue. And, DoT in March last year had moved a plea in the top court seeking permission for allowing staggered payment of the dues by telcos over a period of 20 years.

“This will not bode well for the recovery in the sector and is likely to protract the same, given the elevated debt levels and very low tariffs. The industry is staring at high commitments towards debt repayments and DoT payments in the coming few quarters, with next major payments due in March-April 2022,” Sabyasachi Majumdar, Senior Vice-President and Group Head, ICRA Limited, said.

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In order to meet these, the industry participants will have to look for avenues of fundraising and/or asset monetisation, in addition to focus on substantially improving the average revenue per user (ARPU) levels, he said.

Published on July 23, 2021

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