IN A reprieve to telecom companies Bharti Airtel, Vodafone Idea, and Tata Group’s Tata Teleservices, the Supreme Court Tuesday agreed to hear their plea seeking permission to negotiate the timeline for payment of adjusted gross revenues (AGR) with the Department of Telecommunications next week.
On Monday, Bharti Airtel and Vodafone had moved the court seeking permission to “work out feasible terms mutually with DoT” to ensure they remained a “going concern”. Less than a week before, the court had turned down a review petition seeking an extension in the payment schedule.
Positive for Airtel, Vodafone
The move by the Supreme Court to admit the modification plea is being seen as a positive for telecom players Vodafone and Airtel. This has raised hope that telecom operators may be allowed to negotiate a sustainable schedule with the department of telecommunications for payment of AGR dues.
The matter will now be listed before the same bench led by Justice Arun Mishra, which had initially ruled on the AGR issue, Chief Justice of India S A Bobde said. Whether the fresh petition filed will be heard in the open court or in chambers will be decided by Justice Mishra-led bench, he said.
Both Bharti Airtel and Vodafone Idea, which have much larger AGR liabilities than other telecom and non-telecom players, have already provisioned Rs 34,767 crore and Rs 44,700 crore, respectively, for clearing dues. The apex court’s agreement to hear the case, however, could offer the telcos a breather since they were required to clear their AGR dues by January 23, according to the Supreme Court judgment of October 24.
Following the court’s decision Tuesday, the Vodafone Idea stock closed the day nearly 22 per cent higher, while that of Bharti Airtel ended marginally higher.
On October 24, the court had agreed with the DoT’s definition of AGR, and said the companies, both telecom and non-telecom, must pay all dues to the government along with interest and penalty. Bharti Airtel and Vodafone Idea had then unsuccessfully tried to persuade the DoT to relax the deadline for payment of dues. Having failed, the companies then moved the court for a review of the October 24 judgment.
The review petition, which was dismissed by the court last week, did not give any extension on the deadline for paying AGR dues either. With the option of the review petition also lost, both telcos had on Monday sought modification in the supplementary order in which the court had asked all companies to pay AGR dues within three months from October 24, 2019, and file a compliance report.
In its plea, Vodafone Idea had said that it was “facing a huge financial stress and is not in a position to make either up front payment of the amounts due or provide any financial bank guarantees to securitise the amounts due”.
“It is therefore impossible for the appellant (Vodafone Idea) to make the entire payment of the aforesaid dues within the short period of three months,” the plea said. The company has also said that a loss of Rs 50,898 crore in the July-September quarter had “eroded the net worth and the cash balance”.
Bharti Airtel had, on the other hand, stressed upon the financial viability of the companies and possibility of large scale job losses if no relief was given. “The payment of the due amounts, totaling to over thousands of crores, without proper assessment and financial calculations, and appropriate time period for payment, will not only cause irreparable damage to the appellants (Bharti Airtel), but to the telecom industry at large leading to possible disruption of a public utility service owing to bad financial position of telecom companies,” Bharti Airtel said in its plea.
The combined payout by all telecom companies could be as high as Rs 1.43 lakh crore after the dues for spectrum usage charges linked to AGR is taken into account. The court’s judgment on AGR had also impacted non-telecom public sector enterprises, such as GAIL, Power Grid, Delhi Metro Rail Corporation and RailTel.
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