Following the Supreme Court’s 2019 ruling, Moneycontrol reported that the Center might consider a sizable amount of the adjusted gross revenue (AGR) dues imposed on companies such as Vodafone Idea and Bharti Airtel. This news caused the struggling telecom operator shares to soar to the 10 percent upper circuit in the early session on January 20.
Vodafone Idea shares were trading at Rs 10.02 at 9.35 am, up 10% on the NSE. As other telecom companies echoed the confidence, the BSE Telecom index saw a trading increase of almost 1.5%.
According to the source, Vodafone Idea and other telecom operators have met with the Department of Telecommunications (DoT) several times, during which the telcos have brought up their financial difficulties.
According to reports, the plan calls for waiving 100% of fines, 50% of interest, and interest on penalties. If approved, it may provide telecom carriers with more than Rs 1 lakh crore in financial assistance, of which more than half would go to Vodafone Idea (Vi), which is now experiencing extreme financial difficulties.
Vi’s AGR debt might be lowered by more than Rs 52,000 crore, and Bharti Airtel’s debt could be reduced by over Rs 38,000 crore under this arrangement. There may be a drop of Rs 14,000 crore in Tata Teleservices.
People acquainted with the situation told CNBC-TV18 that the issue of giving up public monies and the requirement for numerous levels of permission would be among the main points of contention for government officials.
According to a report by JM Financial, “The Telecom Act of 2023 does not specifically provide the government the authority to waive the telcos’ dues, even if the government plans to guarantee a “3+1” player market. Therefore, the government cannot absolve the AGR responsibility determined by the SC unless it modifies the Telecom Act or takes any other legislative or executive action.
Therefore, even though the government acknowledges that the SC’s AGR ruling is counterproductive to its goal of having three robust commercial telecoms, telcos have begged the SC for AGR relief for the past four years. Therefore, the government may agree to convert dues into equity or prolong the 4-year moratorium on AGR/spectrum dues payment (expiring in September 2025). Still, it must be NPV neutral,” the statement continued.
The debate about Vodafone Idea’s adjusted gross revenue (AGR) remains ongoing. The cash-strapped firm still feels the effects of the Supreme Court’s September dismissal of petitions by 19 telecoms, including Vodafone Idea and Airtel, asking to recalculate their AGR dues.
Vodafone’s stock rose last month when the government removed bank guarantees for previous spectrum auctions. The telecom company is not required to provide bank guarantees for spectrum auctions before 2021 (2012, 2014, 2015, 2016) totaling Rs 24,800 crore. The business described the government change as a “big relief for telecom companies” in a filing dated December 28.
The business further stated that, before this reform, the company had to submit bank guarantees totaling Rs 24,800 crore against each spectrum installment 13 months before the installment was due for the above auctions. However, they understand that the corporation will not be obliged to give bank guarantees for the five 2012, 2014, 2016, and 2021 auctions.
Despite the recent upswing, investors’ concerns about Vodafone Idea’s continued financial difficulties and potential for future development are reflected in the company’s shares, which have lost 30% of their value in the last 12 months.
