Home News As SC cracks down on AGR dues, finish of highway for Vodafone...

As SC cracks down on AGR dues, finish of highway for Vodafone thought?

When Vodafone posted its Q3 outcomes, it expressed considerations over its survival. workers too are involved with regard to the survival of the agency.
India’s telecom trade could even be headed in direction of a duopoly with the Supreme courtroom coming down closely on the telecom firms within the nation for not paying their AGR dues. Taking a sturdy observe of telecom firms not complying with its order, the SC directed telcos to pay up AGR (Aggregated Gross income) dues by March 17. It moreover requested the managing administrators and administrators of telcos and totally different firms to clarify why contempt movement should not be taken in opposition to them.
it is a most essential blow to the already ailing telecom trade that has been desperately hoping for some aid from the high courtroom.
Making issues worse, PTI reported on Friday that the division of Telecommunications (DoT) ordered Vodafone thought, Bharti Airtel and others to pay their AGR dues earlier than midnight.
that’s after the Supreme courtroom took a sturdy view on DoT as properly directing it to withdraw its order that said that no coercive movement could even be taken in opposition to telecom firms defaulting on statutory dues payment.
That leaves telecom firms with much lower than a day to cough up an enormous amount. Vodafone thought owes over Rs 50,000 crore, Bharti Airtel Rs 35,586 crore and Tata Teleservices has to pay Rs 14,000 crore. Jio, which has dues of solely Rs 60 crore has made its payment already.
Vodafone thought has maintained ever for the rationale that SC’s October verdict that within the absence of any aid, it could should shut operations within the nation.
On Thursday, when Vodafone posted its Q3 outcomes, it expressed considerations over its survival.
“the current provides uncertainty on account of pending liabilities casts a serious doubt on its potential to “proceed as a going concern,” Vodafone thought said in a assertion.
“The agency’s potential to proceed as a going concern is primarily depending on a optimistic consequence of the utility for modification of the ‘Supplementary Order’ earlier than the Supreme courtroom and subsequent settlement with DoT for the payment in instalments after some moratorium and totally different reliefs,” it added.
On Friday, after the SC path, Vodafone thought’s inventory fell by over 20% closing 23.21% decrease at Rs three.forty 4.
Telecom expert Piyush Jain says that whereas Airtel has the money, Vodafone thought doesn’t. “Vodafone PLC doesn’t search to make investments anymore into Vodafone thought. It doesn’t have ample to make funds at quick discover. I don’t assume they are going to be left with an selection. I doubt any sovereign fund will are available in in a single day and put in money.”
a quantity of trade veterans and analysts talking to CNBC TV18 moreover expressed a associated view – that the Indian telecom sector could even be headed in direction of a duopoly of Bharti Airtel and Jio. 
“we do not see the situation for VIL being salvaged with out authorities intervention. other than totally different stakeholders in VIL, the authorities too could even be one in every of many most impacted events if the agency shuts down because it’s owed Rs 900 billion in deferred spectrum dues, other than the AGR authorized obligation,” ICICI Securities said in a observe final month.
However, Vodafone thought has not however commented on the SC path.
within the meantime, workers too appear to be anxious with regard to the survival of the agency. An worker working at a Vodafone retailer who didn’t search to be named said that everyone was frightened about dropping their jobs at a time when the financial system is fragile. He moreover said that subscribers have been flocking enquiring about porting out of the community.
“expensive Modi ji, Pl loosen up and assist Vodafone thought for payment of AGR dues. We have already got not any job attributable to closure of so many telecom firms. My solely supply of earnings is job in Vodafone thought. Pl assist us from being jobless,” a tweet from an worker said.
Airtel has raised $three billion in debt and equity final month. So, whereas it gained’t make issues greater for the telco, it can nonetheless be in a spot to pay its dues. Bharti Airtel posted a consolidated web lack of Rs 1,035 crore in Q3 (Oct-Dec) and hinted at additional hike in tariffs.
in reality, Bharti Airtel CEO Gopal Vittal said earlier this month that the existence of its rival Vodafone thought is important for India to stay a 3-personal participant market since that will carry investments, stop job losses and restore the reputation of the struggling trade.
“I assume Vodafone thought will stay and that i search it thrives… it could even be crucial that India stays a 3-participant market as that’s good from all views, (as in), investments, jobs and reputation,” Vittal said on a post-earnings name.
This obtained here after Vodafone international CEO Nick be taught reiterated while Vodafone’s Q3 earnings name that the situation in India is important.
“notably, we have now requested an speedy two-12 months moratorium on spectrum funds, a lowering of license costs and taxes, the waiving of curiosity and penalties on the AGR case and the potential to make the payment on the principal over 10 years with a two-12 months moratorium,” be taught said while the earnings name.  
The trade, the authorities and telecom consultants have said within the previous as properly that duopoly isn’t an perfect situation for India’s telecom market.
In an earlier dialog with TNM, Rajiv Sharma, Head of evaluation at SBIcaps said that a 3-participant market is an optimum construction in massive markets, with India being value-sharing market. “Telecom is a price-intensive trade and value-sharing makes them extra productive and capital setting nice. With simply two gamers, it may very well be tough to share prices. CCI (rivals fee of India) may not favour it each,” he instructed TNM on the time.
The authorities too, has said within the previous that it doesn’t search any agency to shut operations. In November 2019, Finance Minister Nirmala Sitharaman had said, “I search everyone to be up and dealing. We search the financial system to have good quantity of firms in enterprise and flourish of their enterprise.”
The AGR difficulty originated in 1999, when telecom operators migrated to a brand new system provided by the authorities below which they agreed to share a sure proportion of income with the authorities. Operators argued that AGR should comprise solely income from telecom suppliers, however the DoT insisted that it should embrace all income earned by an operator.
After a protracted authorized battle, in October 2019, the Supreme courtroom upheld the authorities’s definition of AGR and requested telecom firms to clear all current dues that quantity as much as Rs 1.forty seven lakh crore in complete.
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