India’s Supreme Court has given telecommunications companies affected by last October’s adjusted gross revenue (AGR) dues decision time to pay off their debts – but will it be long enough?
The timeframe given by the court was 10 years, starting next year. Affected companies need to pay 10 percent of their dues upfront by 7 February every year until 2031.
The government and telecommunications companies have disputed the calculation of AGR for many years. The companies argued that AGR should include income only from telecommunications operations. The Department of Telecommunications (DoT) said it should also include non-telecom incomes such as the sale of assets and interest on deposits. This interpretation was upheld by the Supreme Court last year.
Vodafone Idea, which has to pay a total in the region of $7 billion, and Bharti Airtel, owing just over half that sum, had hoped for 15 years in which to pay up. The Indian government, rather confusingly, had asked for an even longer payback period: 20 years. Both of the big operators have paid a proportion of their debts already, but Vodafone in particular still owes the vast majority of its AGR dues.
MDs and chairmen of the companies will have to ensure that annual instalments are paid, or face contempt proceedings.
So is this good news or bad news for Vodafone Idea in particular? It had claimed that it might have to close down its operations if made to pay all its dues in one go, so this is a positive outcome by comparison. However its shares took a tumble soon after the news broke.