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Govt dealing with AGR crisis, focussed on reviving sustainability of sector: Sunil Mittal

He added that Airtel will pay up its balance AGR dues as per its calculations much before March 17, the next date of hearing in the Supreme Court in the case. Sources said Airtel may pay up as early as by end of February. It has already paid Rs10,000 crore to the government.

ET Bureau|
Last Updated: Feb 20, 2020, 08.56 PM IST
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Sunil Mittal
In his meeting with the telecom minister, Mittal also sought cut in taxes and levies for the sector.
NEW DELHI: Bharti Airtel Chairman Sunil Mittal said that the government is “very focussed” on reviving sustainability of the telecom sector amid the adjusted gross revenue (AGR) crisis which has added to the financial stress of the industry.

He added that Airtel will pay up its balance AGR dues as per its calculations much before March 17, the next date of hearing in the Supreme Court in the case. Sources said Airtel may pay up as early as by end of February. It has already paid Rs10,000 crore to the government.

“The AGR has been a major crisis for the industry that is being dealt with by the government. This government is very focused on reviving sustainability of the sector,” Mittal told reporters, after meeting telecom minister Ravi Shankar Prasad on Thursday. Wednesday, he had met finance minister Nirmala Sitharaman.

“…All these meetings which are happening reflect how the government is alive to the situation faced by the sector,” he said.

Taking about his meeting with Prasad, Mittal said that he had made suggestions on how to improve the health of the sector, including rationalisation of taxes.

“The industry has very very low revenue left in the kitty that needs to be addressed and most importantly, this AGR hit to the industry also needs to be dealt with,” he said.

He added that he didn’t discuss the issue of setting a floor price with the minister since it falls in the domain of the telecom regulator, which has backed the industry on the need to rationalise levies.

“At the same time we all are aware that the revenue of the industry has collapsed and the tariffs need to go up,” Mittal said. A day earlier, Mittal had said while the industry was under stress, the telco remained safe.

Thursday’s comments came on a day Fitch removed the ratings of Bharti Airtel from Rating Watch Negative (RWN) following equity injection in January and expected growth in operating profit for year ending March 2020 with 2021 appearing more stable to offset debt.

"The Rating Watch Negative is removed from all the ratings. The stable outlook reflects our view that an equity injection of $2 billion in January 2020 and EBITDA growth for the financial year ending March 2020," the New York-based credit ratings agency said in a statement.

The firm said that FY21 would be more than sufficient to offset the increase in debt to pay regulatory dues of up to $4.9 billion, which stem from a dispute over AGR.

Shares of Bharti Airtel closed 0.4% higher at Rs 545.50 on the Bombay Stock Exchange (BSE) Thursday.

The agency expects Airtel’s revenue to grow by 8% in FY20 and 16% in FY21, driven by tariff increases and subscriber additions, and that the telcos would pay its regulatory dues in Q4 FY20.

"We estimate Bharti's consolidated earnings before interest, tax, depreciation and amortization (EBITDA) will increase by 20%-25% a year in FY20 and FY21 due to easing competition in the Indian wireless market and continued strong growth in its African markets and Indian enterprise segment," the agency added.

The agency said the equity injection alleviated pressure on the telco's balance sheet resulting from the high regulatory-dues obligations.

Fitch also believes that FY20 EBITDA for the telecom industry would rise by 25%-35%, driven by a 15% increase in blended average revenue per user (ARPU) to Rs 150-155 by end of Q4 FY20.

Also Read

Supreme Court to hear AGR case, government plea on AGR relief on March 18

DoT focuses on Covid, AGR on backburner for now

AGR woes: No decision on relief to telcos at DCC meet; DoT officials say more AGR-data needed

Relief in the works for AGR-hit telecom companies

Telecom AGR crisis: RBI closely monitoring developments

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