telecom industry

AGR Dues: DoT Plea to Seek 20 Years’ Time for Payment Could Ensure Three Player Market

The Supreme Court of India will hear the Department of Telecommunication’s plea to seek 20 years’ time for payment of AGR dues in 2 weeks

While the Supreme Court of India recently rapped telecom companies for self-assessing their outstanding telecom dues, the top court is still to hear the Department of Telecommunication’s (DOT) plea to seek 20 years’ time for payment of AGR dues. DoT is hopeful the apex court will soften its stance and India will remain a three player market if telcos receive the said time to pay the dues at a reduced interest rate of 8 percent.

Mobile operators had recently done a self-assessment of the outstanding AGR dues and had claimed that it was lesser than the figures proposed by the government. This move, however, was not received kindly by the court, which said that the actions by telecom operators were a clear violation of its rulings on the matter. Nevertheless, the top court is yet to hear DoT’s plea and will do so in two weeks time.

DoT Seeks Time for Payment of AGR Dues to Ensure Three Player Market?

Contrary to the claims of several reports, DoT is keen on ensuring that India remains a three private player market, says a report by IIFL Securities. “DoT wants to ensure that Vodafone Idea Limited remains a strong player. It hopes that if telcos demonstrate their intent to pay by depositing around Rs 300 billion by 17 March 2020, the SC may be amenable towards recovering the remaining dues via installments. Till date, Bharti has paid Rs 180 billion, Vodafone Rs 35 billion and Tata Rs 22 billion,” said the report. DoT was also hopeful of Vodafone Idea Limited paying another Rs 60 billion by 17 March 2020.

The demands being made by the government in terms of AGR dues are Rs 370 billion from Bharti Airtel, Rs 440 billion from Vodafone, and Rs 130 billion from Tata. While Reliance Jio is at the safest position in this crisis by having made its full payment of Rs 195 billion by the court-ordered 23 January deadline, the AGR issue is expected to impact Vodafone Idea the most, as per various reports.

Even if the Supreme Court grants 20 years’ time for payment of AGR dues, the Average revenue per user (ARPU) has to see a sharp increase for Vodafone Idea Limited to be able to pay off its dues. According to the IIFL Securities report, the Government of India is supportive of significant ARPU increases to ensure that India remains a three player market. “The DoT officials asserted that current pricing is quite low and that the ARPU has to see a sharp increase. Its view is that if data prices increase by 100%, VIL would be able to pay its dues,” says the report.

Leave a Reply

Your email address will not be published. Required fields are marked *