Bharti Airtel up 7%, Vodafone Idea tanks 17% post SC's AGR order
As per the SC order telcos need to make 10% upfront payment of their AGR dues, with a 10-year payment schedule to begin on 1 April, 2021
MUMBAI : Shares of Bharti Airtel climbed nearly 7%, while Vodafone Idea tanked 17% on Tuesday after the Supreme Court ruled that telecom companies will be allowed 10 years for staggered payment of adjusted gross revenue (AGR) dues beginning 1 April, 2021.
At 2:05 pm, Bharti Airtel was trading at ₹549.55 apiece on the BSE, up 6.93%, while Vodafone Idea was down 11.3% at ₹9.04. Shares of Reliance Communications, which is undergoing insolvency proceedings, advanced 4.6% to ₹2.5.
As per the apex court's order, telecom companies will submit an undertaking and pay 10% of the statutory dues upfront. Any default in the payments would invite additional interest, penalty and account for the contempt of court.
According to analysts at Angel Broking, “Banks with exposure towards VodafoneIdea corrected primarily owing to the street was expecting 15 or 20 years of staggered payment. We could see some pressure in the near term in select Banks with exposure to Vodafone Idea as staggered payment allowed for 10 years against the company /Government demanded 15/20 years, tomorrow the apex court will also give hearing on interest charged on the interest component for the moratorium."
The department of telecommunications (DoT), in March, had appealed to the apex court seeking 20 years for paying AGR dues, which include spectrum usage charges, license fees, interest, penalties, and interest on penalties.
Vodafone Idea and rival Bharti Airtel had sought 15 years for payment of AGR dues, while Tata Teleservices Ltd had requested 7-10 years. Reliance Jio Infocomm Ltd, which launched in September 2016, had paid its relatively minuscule dues of ₹195.18 crore in January, complying with the Supreme Court’s October 2019 judgement.
For Bharti Airtel, the DoT estimate stands at ₹43,780 crore, but according to the telcos’s self-assessment, it owes ₹13,004 crore. The telco has paid this amount along with an additional ₹5,000 crore in ad-hoc payment. Vodafone Idea owes over ₹58,000 crore in AGR dues.
Bharti Airtel as well as Vodafone Idea made hefty provisions with respect to AGR dues in March and June quarters 2020, and as a result, both had reported losses in same quarters.
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