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Business News/ Companies / News/  Voda-Idea will need to cough up over 7,800 crore a year in AGR instalments

MUMBAI: The Supreme Court has given telcos a 10-year window to pay dues related to adjusted gross revenue (AGR), less than the 15-20-year window they had sought.

According to various estimates, telcos will on an average require to pay 7,853 crore--at 9% interest--in annual installments. While it may not be much of a concern for Bharti Airtel, Vodafone Idea’s financials have remained a going concern and a 10-year payment window might add to its liquidity woes, according to analysts.

Vodafone Idea has the weakest balance sheet among top telecom players. For the June quarter (Q1) of FY21, the company reported a massive loss of 25,460 crore due to exceptional costs, including 19,440 crore related to total estimated AGR dues to the government, 123 crore as a one-time spectrum charge and 370 crore for integration and merger costs amounting to a total provision of 19,923 crore.

The telco needs to pay around 58,254 crore more to the Department of Telecommunications (DoT) in license fees, spectrum usage charges (SUC), interest and penalties. In addition, analysts say the operator will require to increase its average revenue per user (Arpu) to 150-175 to be able to stay in business. An SBICap Securities estimate pegs Voda-Idea's annual AGR instalments at 7,853 crore for a ten-year window.

“Given that it already has net debt of 1,155 bn, it may be a stretch to make substantial payment upfront or make payment over tenure of 10 years in a staggered way. This may require introduction of floor pricing/ tariff hike and other relief measures from government," an Axis Capital report had said on 7 August.

Vodafone Idea has paid 7,854 crore in AGR dues over the last few months and had a cash holding of about 3,450 crore as of June. Gross debt (excluding lease liabilities) as of June was 1,18,940 crore, including deferred spectrum charges of 92,270 crore.

The telco’s attempt to monetise its 11.15% stake in Indus Towers after its merger with Bharti Infratel and sell its optic fibre and data centres to raise funds is finally underway, with the Bharti Infratel board approving the merger deal on Monday.

The operator will get approximately 4,040 crore for its stake and has agreed to make a prepayment of 2,400 crore to the merged tower entity from the cash consideration to be received from Infratel at the time of closing.

The April-June quarter was bad for Vodafone, with its revenue market share falling to 23% from 29% in the preceding quarter, according to data from the Telecom Regulatory Authority of India.

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Updated: 01 Sep 2020, 12:54 PM IST
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