Updated: September 1, 2020 4:57:52 pm
The Supreme Court on Tuesday allowed telecom companies to stagger their payments of the adjusted gross revenue (AGR) related dues over the next 10 years. The court ruled that telecom firms like Vodafone Idea, Bharti Airtel and Tata Teleservices would need to pay 10 per cent of their AGR-related dues by March 31, 2021.
The court also said that the Managing Director (MDs) or Chief Executive Officer (CEOs) of these telecom firms would require to submit an undertaking to pay AGR dues as per the Supreme Court’s order.
The three-judge bench comprising of Justices Arun Mishra, S Abdul Nazeer and MR Shah said that the Department of Telecommunications’ (DoT’s) demand and its verdict on AGR-related dues are final.
The judges warned the telecom companies and said that failure to pay the installments of the AGR-related dues would invite penalty, interest and contempt of court.
The top court also announced that the issue of sale of the spectrum by those telecom companies which are facing insolvency proceedings shall be decided by National Company Law Tribunal (NCLT).
Reacting to the apex court verdict on AGR dues, V K Vijaya Kumar, Chief Investment Strategist at Geojit Financial Services, said “The SC verdict giving a ten year time frame for payment of AGR dues with 10 per cent upfront payment can be regarded as reasonably fair. Since the SC has not said anything about the dues of R Com, Aircel and Videocon, this is certainly very positive for Reliance Jio and Bharti Airtel.”
However, he said that the 10-year time frame puts a question mark on the survival of Vodafone Idea. “Indian telecom industry moving to a virtual duopoly is not a desirable development,” he added.
Akshat Jain, partner, of J Sagar Associates, said some operators were looking at a 15 year repayment tenure. “The much awaited Supreme Court verdict providing a 10 year installment for payment of AGR dues will have mixed reactions. The various conditions accompanying such directions will have to be complied with failing which it would lead to contempt of the top court’s directions. Each operator will have to evaluate their available liquidity to continue operations while complying with the direction for payment of AGR dues. The recovery from bankrupt operators will depend on NCLT’s decision of whether spectrum can be sold under IBC, a question which the Court was persuaded not to decide in these proceedings,” he said.
– with PTI inputs
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