Telecos’ plea in AGR dues case dismissed in SC
Last year, the SC gave the telcos 10 years to clear dues owed to the government
NEW DELHI: The Supreme Court on Friday dismissed the applications filed by telecom majors, including Vodafone Idea and Bharti Airtel, seeking rectification of the alleged errors in calculation of Adjusted Gross Revenue related dues payable by them. “All the miscellaneous applications are dismissed,” a bench headed by Justice L Nageswara Rao said while pronouncing the order. The telecom companies had submitted before the apex court that arithmetical errors in the calculation be rectified and there are cases of duplication of entries.
NEW DELHI: The Supreme Court rejected on Friday a plea by mobile carriers seeking corrections of what they called errors in the adjusted gross revenue (AGR) dues, leading to a slump in the shares of embattled Vodafone Idea.
Last year, the Supreme Court gave telecoms companies 10 years until 2031 to clear dues owed to the government for use of the airwaves and as licence fees, after they missed a January deadline to pay roughly $13 billion.
Friday’s ruling is a setback to Bharti Airtel and Vodafone Idea, which had approached the Supreme Court again this year, urging a re-calculation, but will have greater impact on heavilyindebted Vodafone Idea.
Bharti Airtel and Vodafone Idea did not respond to requests for comment.
After the ruling, shares of Vodafone Idea fell as much as 14.6% to their lowest since October, while Bharti lost as much as 2.6% before reversing course.
Friday’s decision does not “bode well for the recovery in the sector,” ratings agency ICRA said in a note, adding that elevated debt levels and very low tariffs were likely to lengthen the process.
Vodafone Idea’s net debt, at ₹1.8 lakh crore was “high”, standing at 10 times its operating profit for the year to March 31, calculations by brokerage Yes Securities show.
It is also losing subscribers at a time of talks with potential investors to raise funds in a market disrupted by Reliance Industries’ Jio telecoms venture launched in late 2016.
The decision is a particularly major blow for Vodafone Idea Ltd (VIL) which faces over ₹20,000 crore in cumulative cash outgo within a year, but had just ₹350 crore in cash and cash equivalents as of the end of March 31, 2021.
The latest verdict will now raise questions of the third largest telco’s survival.
According to the SC’s earlier directions, Bharti Airtel and Vodafone Idea have to pay over ₹43,000 crore and ₹58,000 crore respectively towards AGR dues and penalties, with the payments to be made in annual instalments over a 10-year period. Telcos have to make their annual payments for this year by March 31, 2022.
Telecom companies, however, have questioned the DoT’s calculations. In petitions that have now been dismissed by the SC, Bharti Airtel, Vodafone Idea, and the Tata group had argued that there were “arithmetic errors” in DoT’s calculations that needed to be fixed. While Airtel had estimated its dues at around ₹18,000 crore, Vodafone Idea had pegged its liabilities at around ₹25,000 crore.
Jio, controlled by India’s richest man, Mukesh Ambani, has already paid off its smaller quantum of charges.
The Supreme Court bench comprising Justice N Rao and Justice Aniruddha Bose ruled, “all applications dismissed”.
The written order isn’t out yet.
The SC previously had rejected their self-assessments and ruled the DoT calculations as final.