BackShares of bank, Grasim fall on collateral damage from blow to telcos
The order comes at a time when Indian banks grapple with mounting non-performing assets and have seen their valuations erodeOn Thursday, Yes Bank ended 5.8% lower, State Bank of India 4.7%%, Indusind Bank 4%, RBL Bank 3%, Federal Bank 2.8%. BSE Bankex fell 1.2%
PremiumShares of banks and Grasim Industries slipped on Thursday after the Supreme Court upheld the definition of adjusted gross revenue (AGR) provided by the department of telecommunications (DoT), which effectively means telecom operators may have to pay the government ₹92000 crore in past dues.
The order comes at a time when Indian banks grapple with mounting non-performing assets and have seen their valuations erode.
On Thursday, Yes Bank ended 5.8% lower, State Bank of India 4.7%%, Indusind Bank 4%, RBL Bank 3%, Federal Bank 2.8%. BSE Bankex fell 1.2%.
Shares of Grasim Industries, which has an exposure to the telecom sector via its 11.55% stake in Vodafone Idea, slumped 5%.
The order is a huge blow to private telcos, who have been running losses for the past many quarters and show no signs of making money in the near future.
Vodafone Idea slumped 22%, but Bharti Airtel pared losses and gained 3%.
"Bharti Airtel shares are up even though it will be impacted by the SC order; this is because investors are pricing in a two-player market, with the assumption that Vodafone Idea will not be able to survive under the weight of the penalty," said analysts at two domestic institutional brokerages requesting anonymity.
AGR is the basis on which department of telecommunications (DoT) calculates levies payable by operators and it has been a bone of contention between the telcos and the government. Telecom operators are liable to pay around 3-5% and 8% of the AGR as spectrum usage charges and licence fees, respectively, to DoT.
The matter had been under litigation for 14 years with operators arguing that AGR should comprise revenue from telecom services, but DoT insisting that AGR should include all revenues earned by an operator, including that from non-core telecom operations.
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