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Airtel bats for lenient view on AGR dues

Chief financial officer (India) Badal Bagri’s comments came on an earnings call on Wednesday, even as the telco noted that the operational highlights for the quarter to September reflected signs of continued recovery.

ET Bureau|
Oct 31, 2019, 08.00 AM IST
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Global rating agency Fitch put Airtel’s BBB- long-term foreigncurrency Issuer Default Rating (IDR) on rating watch negative (RWN).
KOLKATA: A senior Bharti Airtel executive said there is room for the government to consider relief for the incumbent telecom operators which are facing a massive combined payout of nearly Rs 81,000 crore in additional statutory dues following the Supreme Court order on adjusted gross revenue (AGR).

Chief financial officer (India) Badal Bagri’s comments came on an earnings call on Wednesday, even as the telco noted that the operational highlights for the quarter to September reflected signs of continued recovery in its core mobile services and ruled out any price hikes in response to rival Reliance Jio Infocomm’s recent decision to recover interconnect usage charges (IUC) on calls to customers of other telecom networks.

Bharti Awaits Outcome of IUC Paper
Bharti Airtel CEO says ARPU stable in July-Sept due to customer uptrading and other factors

“There’s definitely room for the government to consider (a lenient view) on the AGR issue (and associated penalties) as the matter has been under litigation for many years and several bodies have interpreted the definition of AGR very differently, and past judgements too have been in favour of the telecom service providers,” said Bagri.

Bharti Airtel’s chief executive for India, Gopal Vittal, however said it would be premature to talk about plans to address “liquidity issues and funding requirements” when clarity is awaited on what the telcos need to pay up, following the court verdict, and whether “any relief is forthcoming from the government”.

The Sunil Mittal-led telco’s views on the AGR issue come a day after the government tasked a panel of secretaries with reviewing financial stress levels in the debtladen telecom industry and suggesting ways to provide relief to incumbents such as Vodafone Idea and Bharti Airtel, which were hit hardest after the Supreme Court backed the government’s broader definition of AGR for telcos to include their non-core income streams.

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As per the telecom department’s submissions in court, Bharti Airtel could face demands of nearly Rs 22,000 crore in licence fees, plus penalties and interest. Spectrum usage charge (SUC) dues could account for another Rs 20,000 crore to the government. Vodafone Idea faces licence fee and SUC dues of around Rs 39,000 crore.

RATINGS HIT
Global rating agency Fitch put Airtel’s BBB- long-term foreign currency Issuer Default Rating (IDR) on rating watch negative (RWN), saying “the RWN reflects uncertainty on the amount and timing of unpaid regulatory dues” after the apex court’s decision on definition of AGR.

The Bharti Airtel executives were speaking on an earnings call a day after the telco released unaudited operational highlights for its India business that showed signs of continued recovery during July-September, reflected in a 0.8% sequential growth in mobile services revenue to Rs 10,812 crore, along with addition of 2.6 million customers after four successive quarters of losing users. While the telco’s mobile revenue continued to trail that of Jio, the older operator trumped its new rival on average revenue per user (ARPU) and average data consumption. Bharti Airtel shares closed 2.31% higher at Rs 368.25 on the BSE on Wednesday.

Vittal said the company did not view Jio’s move to charge for calls made to rivals as a tariff hike but merely the passing on of a regulatory bilateral charge between operators. “We are not doing anything in response but will await (outcome) of (telecom regulator) Trai’s consultation paper on IUC, following which we will take appropriate action,” he said.

The Bharti Airtel CEO also said that ARPU had remained stable owing to a combination of factors, including uptrading of customers on bottom-end packs to higher-priced 4G bundles, the growing popularity of Airtel Thanks platform and the tweaking of minimum recharge plans by offering incoming facility for seven days instead of 14 after the expiry of the recharge.

Airtel’s ARPU fell marginally quarter-on-quarter by Rs 1 to Rs 128 — impacted as it was by onboarding of low revenue-generating customers following the Tata Tele consolidation — while it increased 28% year-on-year in the three months to September.

Also Read

Airtel’s AGR burden likely to get heavier

Airtel moves SC for government talks on AGR

Voda Idea AGR dues could rise further

GAIL, Oil India & Power Grid caught off guard on AGR dues

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