AGR case: SC orders telcos to file balance sheets of past 10 years

In its affidavit, Bharti Airtel on Thursday told the court it had paid a substantial part of its AGR dues, seeking 20 years to pay the rest.

The Supreme Court has opened a new front, asking Bharti Airtel and Vodafone Idea to submit their financial statements for the past 10 years in the long-winded adjusted gross revenue (AGR) case as the two telcos listed reasons for not furnishing bank guarantees and sought a 20-year term to pay their dues. The top court will next hear the case in the third week of July.

In its affidavit, Bharti Airtel on Thursday told the court it had paid a substantial part of its AGR dues, seeking 20 years to pay the rest. Explaining why furnishing a fresh bank guarantee was not necessary, the Sunil Mittal-led telco told the court Airtel was no fly-by-night operator. Financially stressed Vodafone Idea’s counsel said if it was forced to give a bank guarantee, the company would go down, hitting hundreds of jobs. The Department of Telecommunications (DoT) has sought time from the court to assess the affidavits of the telcos.

Responding to the court’s recent observation that there was no merit in the government asking public sector units to pay Rs 4-trillion AGR dues, The DoT has withdrawn the bulk of its demand. The DoT told the SC on Thursday that it had decided to withdraw 96 per cent of the Rs 4-trillion demand against non-telecom PSUs such as GAIL and Power Grid Corp. In effect, AGR dues worth Rs 3.7 billion have been taken off.

Solicitor General Tushar Mehta, representing the DoT, informed a three-judge bench headed by Justice Arun Mishra that the demand against non-telecom PSUs had been withdrawn.

AGR dues paid by telcos to reflect in FY20 revenue receipts: Report

Officials said the amount was not much to have any bearing on the fiscal position.

Government will account the paid AGR revenues, which is so far Rs 25,896 crore, as revenue receipts in the current fiscal that will help the Finance Ministry tide over the tax revenue shortfall expected in FY20 to some extent, sources said.

The AGR amount may also go up till the end of this fiscal (March 31, 2020).

Though officials said the amount was not much to have any bearing on the fiscal position.

Government had not accounted for this figure in the 2020-21 Budget as it was in dispute but since this part amount has been received in the current fiscal, it will be on a revenue receipt as these are actual receipts, and any futuristic projections from sub judice cases cannot be done.

Then there is the Rs 6,095 crore spectrum auction dues from past auctions paid by the telcos on Tuesday that is already accounted for as the non-tax revenue, so it will not have any bearing on the fiscal positions, said sources.

For FY20, the fiscal deficit is already pegged higher at 3.8 per cent. The non tax revenue stands at Rs 2,52,083 crore in the April-Jan period. Fiscal deficit has touched 128.5 per cent of budget estimate by January-end.

Revenue receipts during April-January were at Rs 12.5 trillion or 67.6 per cent of the Revised Estimate (RE) for 2019-20. The government data said that total expenditure at January-end was Rs 22.68 trillion or 84.1 per cent of RE, higher than 81.5 per cent in the corresponding period of the last fiscal.

The RE has pegged the target for collection of direct taxes for the current fiscal, which ends on March 31, at Rs 11.70 trillion.

On Tuesday MoS Anurag Thakur told Rajya Sabha that the government has collected Rs 7.52 trillion direct tax from April 2019 to January 2020. On Tuesday the three telecom operators -- Airtel, Jio and Vodafone Idea paid Rs 6,095 crore in total from past spectrum auction dues.

Separately Tata Teleservices paid Rs 2,000 crore as reconciliation amount towards AGR which took the total AGR dues so far paid by the telcos to Rs 25,896 crore.

Last month Economic Affairs Secretary Atanu Chakraborty had said that the government has not included AGR dues payment in the Budget 2020-21. "AGR dues payment has not been taken into account in the Budget," Chakraborty said at a post Budget event in FICCI

DCC may discuss telcos' AGR issue on Friday; COAI presses for relief

The industry has made a string of demands including a moratorium, staggered mode of payment, lower licence fee and setting up of a tariff floor.

The Digital Communications Commission, the apex decision-making body in the telecom sector, is expected to meet on Friday to deliberate on a relief package for the financially stressed industry.

As directed by the Supreme Court, telecom companies need to pay Rs 1.47 trillion to the government towards licence fee and spectrum charge dues linked to adjusted gross revenue (AGR).

Of this, Bharti Airtel needs to pay Rs 35,500 crore and Vodafone Idea more than Rs 50,000 crore—they have paid just a fraction of the total till now.

The industry has made a string of demands including a moratorium, staggered mode of payment, lower licence fee and setting up of a tariff floor.

Sources said that any relief for the sector would come with riders.

“They (companies) cannot manipulate us, they have to make further payments before even seeking relief,” a Department of Telecommunications (DoT) official said.

The DCC, formerly known as the Telecom Commission, comprises officials from the departments of telecommunications, electronics and information technology, revenue, and think tank NITI Aayog.

The DoT is expected to make a presentation to the commission regarding the possible relief scenarios.

Cellular Operators’ Association of India, a body representing the telecom industry, on Thursday urged the Union government to step in so that the telecom sector can be brought back on track.

COAI, in a letter to Telecom Secretary Anshu Prakash, asked for easier terms for payment of statutory dues by telcos, including extension of loans at lower interest rates to cover the AGR liabilities, as also fast implementation of floor prices, to rescue the troubled sector.

AGR issue: Top FinMin, NITI, DoT officials talk relief measures for telcos

The telecom department officials remained tightlipped after the high-level meeting on Sunday.

An inter-ministerial group comprising officials from the finance ministry, NITI Aayog, and Department of Telecommunications on Sunday discussed urgent relief measures that could be extended to the telecom industry on adjusted gross revenue (AGR) issue.

The telecom department officials remained tightlipped after the high-level meeting on Sunday. The meeting comes at a time when the companies stare at Rs 1.47 trillion in unpaid dues — Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.

Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea owe about 60 per cent. Airtel has raised $3 billion in the past few months and is expected to have sufficient funds to tide over the AGR crisis. Vodafone Idea, which has paid just 7 per cent of its total Rs 53,000-crore statutory dues, remains vulnerable.

Bharti Airtel Chairman Sunil Mittal had last week appealed to the government for cut in levies and taxes, in order to pull the sector out of what he had described was an “unprecedented crisis”.

The government, meanwhile, is looking to strike a balance between complying with the Supreme Court order on AGR dues, ensuring health of the sector and safeguarding consumer interest.

Both Mittal and Vodafone Idea Chairman Kumar Mangalam Birla continued to meet top government functionaries throughout the last week to seek prompt measures that would offer a breather to the sector.

A top government official had recently said attempts were being made to balance the need for health of the sector, consumer interest while complying with the Supreme Court order on statutory dues.

Although the official had not elaborated, sector watchers had said the statement alluded to the government keen on ensuring adequate competition by retaining the present three-plus-one model of competition (three private players and one public sector company). The statutory dues arose after Supreme Court, in October last year, upheld the government’s position on including revenue from non-core businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

AGR verdict: Data could be the new Onion, Mr Ravi Shankar Prasad

The need of the hour could be to let Vodafone-Idea continue with the business providing them an extended rope to make the payments over a period of time, than to kill the "goose".

The Hon. Supreme Court on Friday rapped the telecom operators and ordered them to pay the adjusted gross revenue (AGR) dues by the stroke of midnight on Friday. This is akin to a “Death Warrant” for Vodafone-Idea. The legal system has to follow the rule book and is bound by law. However, it’s the executive which has to “think on its feet” and figure out the best solution for this situation from a holistic viewpoint, vis-à-vis nailing a “culprit”.

All eyes would be on the Telecom Minister, Mr. Ravi Shankar Prasad, who will need to think “out-of-the-box” than take the easy path of toeing the Hon. Court’s directive. Before shutting Vodafone-Idea, the Telecom Minister should figure out how to recover AGR dues from the corpses of telecom sector, viz. Reliance Communication (RCom), Aircel, Telenor, Sistema and Videocon. Not everybody comes with a rich pedigree like the Tatas, who are paying-off dues of Tata Teleservices through the parent Tata Sons.

Now, here is what would happen if Vodafone-Idea were to shut shop:

- Non-recovery of dues: It will defeat the very purpose of AGR, turning this imbroglio into a long-drawn process without any clarity on closure.

-Job losses: About 14,000 employees, along with numerous others who are directly dependent on Vodafone-Idea as casual workers, dealers, service providers etc. will suffer.

- Non-performing assets (NPAs): Nearly Rs 1.15 trillion could turn NPA. This could be another IL&FS-type event. Unlike other NPAs, the so called “assets” of a telecom company can disappear in thin air the day it shuts down. Additionally, who would shoulder the responsibility paying-off home loans, personal loans etc of the employees?

- Telecom tariffs: Most telecom players have already increased tariffs by about 40 per cent recently and should double to about Rs 300, as per CEO of Airtel, Gopal Vittal, for the sector to remain sustainable. However, in the event of demise of Vodafone-Idea, the tariffs can shoot up further within a short span.

- Porting: Some 30 crore Vodafone-Idea customers will need to the ported out of the network, leading to possible disruption of services and inconvenience. Porting customers are normally given a red carpet welcome, but the Vodafone-Idea customers may be treated as refugees.

Vodafone Idea posts Rs 6,439-cr Dec-quarter loss; subscriber base falls 21%

Posts sixth straight quarterly loss in Q3.

Vodafone Idea reported a consolidated loss of Rs 6,439 crore for the December quarter as compared with a Rs 5,005-crore loss in the same period in 2018-19.

This is higher than analyst estimates, which had pegged the loss at Rs 4,000 crore, after being in the red by a record Rs 50,922 crore in the September quarter. Exceptional items in the quarter were valued at Rs 633 crore, largely on account of integration and merger-related costs.

While a large part of the liabilities on account of aggregate gross revenues (AGRs) was in the September quarter (just over Rs 30,000 crore), the company made a Rs 53-crore balance provision for those in the December quarter. The company posted revenues of Rs 11,089 crore, down 6 per cent over the year-ago quarter, and this was in line with analyst estimates.

Though the churn, which was at 5 per cent a year ago, has come down to 3.3 per cent in this quarter, its subscriber base saw a decline of 21 per cent YoY to 304 million. Bharti Airtel’s subscriber base was flat at 283 million while Jio reported a 32 per cent increase in subscribers to 370 million.

On a sequential basis, the company posted a growth rate of 2.3 per cent. While the price hike has not so far been reflected in the performance, the gains on a sequential basis were led by 4G additions and improvement in average revenue per user (ARPU).

While 4G addition growth was 9.4 per cent, ARPU growth was 1.8 per cent. On a YoY basis, ARPUs were up 22 per cent.

Led by revenue growth and synergy gains from the merger, operating profit on sequential gains was up 0.7 per cent to Rs 3,421 crore.

Higher interconnect costs, however, limited the gains. The company indicated it had achieved 85 per cent of its targeted operating expense synergy of Rs 8,400 crore and is on track to achieve the synergy gains by the first quarter of FY21.

AGR dues: DoT talks tough on deadline, telecom companies sit on the fence

Telcos discuss giving January 24 deadline a miss.

BS : The Department of Telecommunications (DoT) will begin issuing notices to telecom companies after the January 24 deadline for payment of AGR (adjusted gross revenue) dues, set by the Supreme Court, lapses, a senior official said.

This comes even as the apex court on Tuesday agreed to list the “modification petition” filed by Bharti Airtel, Vodafone Idea and Tata Group for “sometime next week”. The firms have sought a change to the 90-day deadline for payment of Rs 1.47 trillion worth of AGR dues, and permission to engage with the DoT on the terms and timing of payment.

It is learnt that the DoT will issue notices in compliance with the apex court’s October 24, 2019, order that stated that the AGR-related dues need to be paid by January 24.

“We cannot go against the SC. Therefore, we have to recover dues from the companies according to their order,” an official said. He added that if the companies get any relief from SC next week, their payments will be adjusted for any future settlement.

Meanwhile, leading telecom companies are holding hectic parleys as they consider skipping the deadline for payment of AGR dues.

Rajan S Mathew, director general of Cellular Operators Association of India (COAI), said: “I understand that most of the telcos may wait till the hearing of the new petition before they make the payment.”

Mathew said there were enough judicial precedents, where the court had not executed its order, pending further adjudication in the same court. He said that they will continue to hold talks with DoT and are hopeful that no coercive action will be taken, though there has been no official communication to that effect.

This view was echoed by the lawyer Shally Bhasin, who represented Vodafone Idea. Bhasin told TV channels that no one was going to pay the AGR dues and that telcos have requested the court to let them discuss the matter with DoT and finalise the payment plan.

However, Bharti Airtel declined to comment on the issue, and it is not clear whether it will pay some money upfront or follow the same line as Vodafone Idea.

In the case of Jio, which was not part of the review petitions, it is expected to pay by the deadline. Jio declared in its recent financial results that it has estimated the liability for the period from 2010-11 to 2018-19 at Rs 177 crore for licence fee and spectrum user charges (SUC), in view of the SC judgment.

Airtel $3-billion QIP plan: Issue price at a discount over floor price

Bharti Airtel has to pay nearly Rs 35,586 crore in additional statutory dues.

Company News : Bharti Airtel has announced allotment of 32.35 crore equity shares to eligible institutional buyers at an issue price of Rs 445 per share as part of $2 billion (over Rs 14,000 crore) qualified institutional placement that closed on Tuesday.

The issue price was at a discount of 1.57 per cent to the stated floor price of Rs 452.09 per equity share. The company had embarked on a mega fund raising exercise, the proceeds of which will be used to pay the adjusted gross revenue (AGR) liability and invest in the network.

Bharti Airtel has to pay nearly Rs 35,586 crore in additional statutory dues, after a Supreme Court ruling on AGR liabilities of telecom companies in October last year.

Earlier this month, shareholders of Bharti Airtel had approved proposals to raise up to $2 billion (over Rs 14,000 crore) in equity and another $1 billion (around Rs 7,000 crore) in debt.

Airtel has announced the closure of the issue period for the qualified institutional placement (QIP) and fixed the issue price at "Rs 445 per equity share which is at a discount of 1.57 per cent to the floor price of Rs 452.09 per equity share".

As many as 32.35 crore equity shares are being allotted to eligible qualified institutional buyers, the company said in a regulatory filing. The special committee of directors for fund raising exercise also cleared the terms of foreign currency convertible bonds (FCCBs) including the issue price.

"FCCBs due 2025, convertible into fully paid-up equity shares of face value of Rs 5 each of the company at a price of Rs 534 per conversion equity share to the initial purchasers subject to receipt of funds, satisfaction of other conditions precedent and settlement as per applicable laws and procedures and relevant agreements," the filing said.

Jio, BSNL undecided on tariff hike, taking stock of evolving scenario

Jio is waiting for the tariffs numbers announcement by the telcos duo and will react after that.

Faced with almost no choice and amidst reports of government moving to set a floor price for voice and data, two hardest-hit telcos - Airtel and Vodafone - on Monday announced their decision to raise tariffs from next month while their arch-rival Reliance Jio has so far not made up its mind and is watching the developments.

According to BSNL sources, the PSU will examine the situation and react.

PSU sources said it is taking stock of the evolving scenario and as both the telcos have not announced how much the increase in the tariffs will be, so the PSU will examine and then react on the proposed hike once these two announce the quantum.

After remaining free on voice calls for three years, Reliance Jio, from October, started charging 6 paise a minute for making calls to any non-Jio number after Trai floated a consultation paper on seeking deferral of the zero IUC regime citing non-symmetry traffic. Currently tariffs are under forbearance.

A questionnaire on tariff hike from their side sent to Jio had not been responded at the time of writing and Jio officials were also not responsive to the tariff hike query of IANS.

However, sources said Jio is waiting for the tariffs numbers announcement by the telcos duo and will react after that.

After tariffs remained subdued for the last three years since Jio's entry, finally Airtel and Vodafone announced plans to hike them after the Supreme Court asked them to follow DoT's AGR computation method on revenue sharing with the government. By that both are liable to pay about Rs 74,000 crore by January 24, 2020, though a panel of Secretaries to the Central government are looking at options of giving them some relief through cut in levies and moratoriums and a longer repayment period.

Vodafone Idea last week reported a consolidated loss of Rs 50,921 crore - highest ever loss posted by any Indian corporate - for the second quarter ended September 30, on account of liability arising out of the Supreme Court order in the adjusted gross revenue case. Airtel posted a record quarterly loss of Rs 23,045 crore.

Business Standard

AGR impact: Voda Idea posts biggest quarterly loss in India Inc history

AGR liability leads to pre-tax loss of Rs 36,959 crore.

Vodafone Idea revealed a gigantic pre-charge loss of Rs 36,959 crore for the July-September quarter after it accommodated installments identified with balanced gross incomes, or AGR. The organization endured a shot of Rs 30,774 crore (counting AGR) for the quarter. This prompted lost Rs 50,922 crore at the net level, the most noteworthy ever for an Indian organization. The organization had posted lost Rs 4,974 crore in the year-back quarter while the misfortune in the June quarter was Rs 4,874 crore.

Offering a reprieve up of the liabilities by virtue of AGR, the organization provisioned for Rs 27,610 crore because of permit expenses and Rs 16,540 crore, remembering interest and punishments for intrigue, identified with range utilization charges (SUC) up to September 30, 2019....Article Source : BS

Liabilities by virtue of AGR are Rs 25,678 crore. The gauge depends on requests got from Department of Telecommunications (DoT) and extra gauges.

While the organization has accommodated SUC, taking into account that no range is utilized for producing non-telecom pay, it is assessing the toll of SUC on such salary. The organization is documenting an appeal to survey the Supreme Court judgment of AGR.

AGR sway: Voda Idea posts greatest quarterly misfortune in India Inc history

Income from activities remained at Rs 10,844 crore, down 3.8 percent down from the last quarter. This was barely lower than the Bloomberg agreement evaluations of Rs 10,925 crore. The outcomes were affected via regularity and extreme floods in a large number of its key markets. On a year-on-year premise, income recouped by 41.5 percent.

Income before intrigue, expense, deterioration, and amortization (Ebitda) for the quarter diminished to Rs 3,347 crore, a successive decrease of 8.3 percent since lower income was somewhat counterbalanced by proceeded with cost cooperative energy acknowledgment. The supporter base sneaked past another 9 million during the quarter to 311.1 million with normal income for every client (ARPU) at Rs 107 contrasted with Rs 108 in Q1.

"The supporter beat keeps on improving, arriving at 3.5 percent in Q2FY20 contrasted with 3.7 percent in Q1FY20 and 7.2 percent in Q4FY19. During the quarter, net supporter augmentations have likewise expanded during the quarter," said the organization.