‘It may not be the right time for telcos to increases ARPUs’
Competitor Vodafone Idea is also unlikely to roll out hikes or bonus this year, having highlighted its financial stress in the Supreme Court recently, said another person. Reliance Jio is expected to give bonus in August, and may give increment to top performers later in the year.
Top court asks govt to reconsider claims and tells telcos to submit guarantees against dues worth around Rs 1.7 lakh crore as per the October 2019 order before June 18. According to the proposal, recovery of AGR-related dues will be staggered over a maximum 20 years from the private phone companies.
Analysts also don’t expect the apex court to allow repayment of such AGR dues over 20 years as suggested by the Department of Telecommunications (DoT), and instead expect a 10-15 year timeline to be set on grounds that the incumbent telcos may also be unable to furnish personal guarantees.
Vodafone Idea may still struggle to sustain its business in the long term given its weak cash flows.
The windfall will help govt bridge its deficit at a time when revenue collection has taken a hit due to slump.
“There have been no notices sent to telcos on their AGR payments or any discussions on it. Now, the focus of the Department of Telecommunications is on how to ensure smooth running of operations during the coronavirus pandemic,” said a government official who did not want to be identified.
Prashant Singhal, Telecom Expert at EY, says if the apex court does not accept the please and unless the government steps in to support, it will become very difficult for telcos to arrange funding at this stage
"Exercise of self-assessment of AGR dues by telecom companies cannot be permitted even in wildest dreams," the court said in its observations during the hearing. "Our judgement on AGR dues is full and final, it should be followed in letter and spirit," the bench said.
The Supreme Court said their order was clear and no further objections would be allowed against payable dues.
With Monday's payments, total amount paid by Vodafone Idea to the Department of Telecommunications (DoT) will be about Rs 6800 crore, which will cover for its self assessed priciple portion of its dues.
On Friday, Vodafone Idea, in a statement said it has "filed its self-assessment of the AGR liabilities with the Department of Telecommunications. The self-assessment discloses the company's AGR liabilities to aggregate Rs 21,533 crores including a principal amount of Rs 6,854 crores for the period from FY 2006-07 to FY 2018-19 and interest up to February 2020."
"... the company has today filed its self-assessment of the AGR liabilities with the Department of Telecommunications. The self-assessment discloses the Company's AGR liabilities to aggregate Rs.21,533 crore including a principal amount of Rs.6,854 crore for the period from FY 2006-07 to FY 2018-19 and interest up to February 2020," said Voda Idea.
The government estimated Tata's dues at about Rs 14,000 crore. The additional payment of over and above Rs 2,197 crore it has already submitted to the government, is aimed at covering any reconciliation differences, the source said.
Airtel submits Rs 8000 crore more as AGR dues, including Rs 5,000 crore extra, subject to DoT reconciliation
The telco had earlier paid Rs 10,000 cr as AGR dues and it looks like the second tranche will be its final one.
Vodafone Idea has demanded fixing minimum tariffs for mobile data at Rs 35 per GB, around 7-8 times of current prices, and for calls at 6 paise per minute along with monthly charges from April 1 to enable it pay statutory dues and make its business sustainable.
Not in sound financial state; can meet liabilities only with government support: Voda Idea on AGR dues
Warning that it is "not in a sound financial state", Vodafone Idea said the company would be in a position to meet its liabilities only if the government initiates steps including allowing set offs for GST credit accumulated so far, and permitting staggered mechanism for payment of balance amount of interest, penalty, and interest on penalty.
Majority owned by Bharti Airtel, Infratel is awaiting the outcome of the next hearing in the Supreme Court on the AGR issue on March 17, that will take stock of payments by telecom operators including Vodafone Idea. The latter is pressing for the deal to be implemented at the earliest, so that it can monetise its 7 per cent in the merged entity for Rs 4,500 crore.
He added that Airtel will pay up its balance AGR dues as per its calculations much before March 17, the next date of hearing in the Supreme Court in the case. Sources said Airtel may pay up as early as by end of February. It has already paid Rs10,000 crore to the government.
The 'test check' will happen for all telcom firms but will start with those claiming they have already made full and final settlement towards their statutory liabilities.
So far, DoT estimates show Vodafone Idea has to pay Rs 56,709.49 crore to the government, of which it paid Rs 2500 crore on Monday with assurance that it will pay another Rs 1,000 crore by this Friday. Vodafone Idea though estimates its AGR dues to be around Rs 23,000 crore, of which Rs 7,000 crore is the principle amount, and the rest interest and penalties.
On AGR, the former secy has advised the govt to offer telcos a one-time settlement scheme to pay the principal due amount as per the AGR definition. "Alternatively, appoint a Board for Vodafone-Idea by ousting current Board on the lines of action taken in case of ILFS and DHFL and secure a moratorium of some time on servicing of loans and government dues."
The apex court did not grant Vodafone Idea any relief, dealing a big blow to the telco which has to pay Rs 53,000 crore to the government as part of its AGR dues and informed on Saturday that it is assessing how much of AGR dues it "can" pay the government and plans to pay it in the next few days.
"The Director of Licensing Finance Policy Wing has issued direction that concerned departments should not take any coercive action against the licensees in case they fail to comply with the Supreme Court order, until further orders," an official source told PTI.
Supreme Court to hear the plea of telecom service providers seeking time to pay AGR dues amounting to Rs 1.47 lakh crore to the Govt.SC to hear plea of telecom service providers seeking time to pay AGR dues
The banking sector’s total exposure to the telecom sector is around Rs 1.5 lakh crore.