The Supreme Court (SC) of India has dealt a major blow to telecom services operators as it rejected their pleas seeking re-computation of the adjusted gross revenue (AGR) related dues.
Bharti Airtel, Vodafone Idea, and Tata Teleservices had filed an application in the supreme court citing discrepancy over the payable AGR dues. These companies had claimed faulty calculations, duplication, unaccounted payments, and disallowed deductions in current figures of AGR dues and sought recomputation.
The Supreme Court had on three occasions earlier held that the AGR demand couldn’t be recomputed. It has reaffirmed its stand one more time and refused any relief. As per the earlier order, Bharti Airtel has over Rs 43,000 crore in AGR dues. And, Vodafone Idea has a balance payment of more than Rs 50,000 crore.
The telcos had also appealed to provide the option of staggered payments over either 20 years or 10 years. That wish is not granted either, as the Supreme Court has directed telcos to clear their outstanding AGR dues by March 31, 2031.
Body Blow for VodaIdea
The Supreme Court's order has kept Vodafone Idea's position critical. After much deliberation, the government has approved fresh foreign direct investment (FDI) of up to Rs 15,000 crore in the company. This fresh investment is critical for the company's survival. But, the SC verdict can cast dark clouds over the future of that deal.
Vodafone Idea has a debt of Rs 1.8 lakh crore and a cash balance of Rs 350 crore. It needs to pay Rs 22,500 crore by April 2022 towards repayment of the regular debt, AGR, and spectrum dues. The promoters have already declined fresh capital infusion from their end. In this context, it looks extremely challenging for the company to continue as a going concern.
Nothing to Lose for Airtel
While a favourable decision would have been a major beneficiary for the company, it has nothing to lose in the existing situation either. As the Supreme Court's decision has made it tougher for VIL to survive, Bharti Airtel will gain from it as it will speed up the consolidation in the sector.
Bharti Airtel has continued with business as usual. The company stepped towards taking tariff hikes with recent tweaks in its corporate and retail plans. With these tweaks, the company could see an increase of 2% in ARPU.
The company has increased its postpaid tariffs for its corporate plans by 30%. In the retail category also, a plan of Rs 249 offering 10 GB data is replaced with Rs 299 plan with 30 GB data. Family postpaid plan of Rs 749 is discontinued, leaving the only option of Rs 999 now with two add-on sims instead of three earlier; it has increased the tariff for add-on connection to Rs 299 from Rs 249 with a higher data allowance.