Indian AGR payments: who’s counting?

Indian AGR payments: who’s counting?

There still seems to be a lot of manoeuvring from Indian operators and government in the two weeks leading up to the next Supreme Court hearing on payment of adjusted gross revenue (AGR) dues.

India’s Department of Telecommunications (DoT) is, according to some reports, planning to write to the various companies still owing moneys to the government after last October’s Supreme Court hearing on AGR payments.

This is because some companies are assessing AGR dues based on their own calculations, and not those of the DoT. The amounts paid so far are well short of the DoT's AGR estimates. The DoT will want to know the reasons for the variation.

For example, Bharti Airtel recently submitted approximately $2.47 billion to the DoT, said to be a full and final settlement of its AGR liabilities; this is only about half the DoT estimate. The same goes for Tata Teleservices, which has paid less than a quarter of the (approximately) $1.9 billion it is said to owe.

Vodafone has so far paid a deposit of some $478 million, but is still assessing its full dues, said by DoT to be well over $7 billion. The payment is apparently towards deferred spectrum dues for airwaves bought in the previous auctions; the deadline for this payment was 3 March.

Into this strange and potentially volatile situation will be flying Vodafone’s global CEO Nick Read, who arrives in India later this week. He is coming to India to underline the need for government to consider a bailout for Vodafone Idea. 

Vodafone Idea has already asked the government to give it 15 years to pay its AGR dues after a three-year moratorium. It also wants a GST refund of just over a billion dollars at present exchange rates, which it hopes can be adjusted against its AGR liabilities. In addition it has asked for a reduction in licence fees and spectrum usage charges, among other relief measures.

The urgency of Vodafone Idea’s situation is hard to estimate precisely. However, Indian press reports cite a report by Goldman Sachs, which last year indicated that Vodafone Idea had a gross cash balance of $1.8 billion as of December 2019.

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