More AGR issues for Indian government

More AGR issues for Indian government

The adjusted gross revenue story is back in the news in India as Vodafone Idea has asked the government for more time to pay its AGR-based dues for the January-March 2020 period.

The telecommunications giant has highlighted the financial and operational pressures it is facing during the Covid-19 crisis as reasons for the delay.

It also seems that the operator has not been able to submit adequate bank guarantees to cover its spectrum payments. These are now due to start in the financial year beginning April 2022 after a two-year moratorium was granted.

Indian news reports suggest that Vodafone Idea wants to provide corporate guarantees for the shortfall instead of complete bank guarantees. This may not be acceptable to the government.

Vodafone Idea had not paid its AGR dues by the March 25 deadline. It is not clear how much this quarter's dues are. Vodafone Idea's annual spectrum dues are roughly $1.7 billion, rising to $2 billion annually when interest is added, taking the delay into account.

While the Indian government has been wary of doing anything that might push Vodafone Idea into financial difficulty this is an even worse time for the government to take tough measures against the operator. At the moment its 300-million-plus customers will be hoping for continuity of service during the lockdown.

The quarterly dues – which Bharti Airtel and Reliance Jio have paid – are apparently not part of the long-standing AGR case being fought in the Supreme Court between the government and various telecommunications companies. Most of that sum – about $7 billion on the case of Vodafone Idea – is still outstanding from some companies. However, the chances of the Supreme Court meeting to discuss proposals to extend the timeframe for payment seem limited during the present epidemic.

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