Telecom Companies Gets Big Shock from Supreme Court on Payment due to Government, Vodafone Idea Will be in Trouble

The country’s telecom sector has seen major changes in the last few years. Big telecom companies have overcome financial difficulties and achieved growth. However, a decision of the Supreme Court on Thursday has given a big blow to this sector. The Supreme Court has rejected the request of telecom companies to recalculate the amount due to the Central Government.

Analysts at rating agency ICRA estimate that Bharti Airtel and Vodafone Idea have to pay around Rs 1 lakh crore to the government as Adjusted Gross Revenue (AGR) dues. This includes spectrum charges and licensing fees. However, the amount due from other telecom companies is not known.

These companies had filed a petition as a last resort against a similar decision of the Supreme Court three years ago. Their argument was that the Telecom Department had AGR had made mistakes in calculating the alleged dues. These companies say that only the revenue from their core services should be counted in the calculation of the dues, while the government argued that non-core revenue should also be included in AGR. This also includes the amount received from rent or sale of land. In a 2019 decision, the Supreme Court had upheld the government’s definition of calculation of AGR.

Balaji Subramanian, Research Analyst at IIFL Securities, said, “If the decision comes in favor of the telecom companies in this case, Vodafone Idea’s debt could have been reduced by about Rs 35 billion. This will make debt funding difficult for Vodafone Idea as banks will be reluctant to fund it due to low cash flow.” The Supreme Court’s rejection of the request for recalculation of AGR has dealt a big blow to Vodafone Idea, which has to pay about Rs 700 billion to the government as spectrum charges and license fees. The central government is also the largest shareholder in Vodafone Idea with a 23.1 percent stake. Analysts believe that due to the strong financial position of Bharti Airtel, this decision will not have a major impact on it. Bharti Airtel and Vodafone Idea did not respond to the request sent for comment in this regard.

(This news has not been edited by the NDTV team. It has been published directly from the Syndicate feed.)