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Telcos estimate AGR dues at half the DoT demand

Airtel, Voda Idea put dues at up to Rs 41,000 crore against DoT calculation of Rs 89,000 crore.

Last Updated: Feb 17, 2020, 08.29 AM IST
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NEW DELHI: Bharti Airtel and Vodafone Idea have assessed their adjusted gross revenue (AGR) dues at about half the amount that the Department of Telecommunications (DoT) has demanded, likely setting the stage for another dispute between the companies and the government, said people with knowledge of the matter.

Initial calculations at Bharti Airtel peg the dues at Rs 15,000-18,000 crore, instead of more than Rs 35,500 crore estimated by DoT. Vodafone Idea’s initial computation puts it at Rs 18,000-23,000 crore against DoT’s Rs 53,000 crore estimate. Cash-strapped Vodafone Idea is likely to pay only a part of the amount in the next few days, said one of the persons. The company had in a statement on Saturday once again warned of the continuing threat to its viability in the absence of judicial relief.

“The reason for the difference in estimates is because even by calculating their AGR according to the Supreme Court verdict of October 24, there are certain errors such as duplication of certain items, as per DoT’s definition,” said the person cited above. “Thus, certain items still don’t make it to the list, and the interest on those items plus the penalties go down.”

A news agency reported that Bharti Airtel, Vodafone Idea and Tata Teleservices may pay some of their dues as early as Monday.

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Department of Telecommunications to Decide on Next Step Today
Lower principal will lead to a reduction in interest and penalties. Of the DoT estimated dues of more than ?89,000 crore for the two telcos, interest and penalties account for 75%.

“This (the self-assessment) itself is a very tedious process — it requires the companies to open their records in a circle-wise manner for the last 16 years and add those items, the penalty and interest thereof and so on,” said a telecom executive.

DoT may issue fresh notices for the balance dues if the telcos' estimates don't match their own, or take other action against them for not paying up on time, officials said. The course of action will be decided on Monday since the telcos hadn’t paid by the Friday midnight deadline some of the circle offices had set. Some other circle offices had sought 'immediate' payment.

Under the rules, DoT can encash bank guarantees submitted by telcos for unpaid dues and can even cancel licences as a final step.

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Vodafone Idea and Bharti Airtel didn’t respond to queries. Airtel sources said that the telco's self-assessment shows the dues to be “significantly lower” than DoT's estimates.

Bharti Airtel has already raised more than $3 billion through a private placement of shares and an overseas bond issue to meet its AGR obligations.

Rights Issue
Vodafone Idea can use Rs 2,826 from its Rs 25,000 crore rights issue proceeds for AGR payments. In addition, the company can call upon Vodafone UK to cough up Rs 8,000 crore towards payment of AGR dues. The telco’s books show cash and cash equivalents of Rs 23,114 crore as of December 2019.

The telco also expects about Rs 4,500 crore from the sale of its stake in the Bharti Infratel-Indus Towers merged entity. But that depends on when the merger will close, with the deal already delayed pending government clearances. It also hopes to sell its optic fibre and data centres but those deals may take a while to close as well.

The telcos have come under increasing pressure to pay their dues urgently after the Supreme Court on Friday rapped them and the government for non-payment by the January 23 deadline.

The court threatened the telcos with contempt proceedings and personal appearance of their top executives unless dues were paid by the next hearing, which is set for March 17. This prompted Bharti Airtel to say it would be paying ?10,000 crore by February 20 and the balance — as per its own assessment— by March 16.

Vodafone Idea said it was assessing what it could pay as part of its dues and plans to do so in the next few days. However, in the same statement, the company once again warned of the continuing threat to its viability in the absence of judicial relief in the dues.

On Friday, Vodafone Idea chairman Kumar Mangalam Birla met telecom minister Ravi Shankar Prasad to discuss the situation. The telco has been highlighting the negative impact on the telecom ecosystem and the jobs that will be lost if telco is forced to shut.

Bharti Airtel, Vodafone idea and Tata Teleservices have been trying to get relief from the Supreme Court on the latter’s verdict of October 24 that widened the definition of AGR to include non-core items. This left 15 telcos facing Rs1.47 lakh crore in dues, with Bharti Airtel, Vodafone Idea and Tata Teleservices the worst hit.

Internal Assessment
Tata Tele’s internal assessment also shows the dues to be “significantly lower” than DoT’s estimate of nearly ?14,000 crore, said another person. An email sent to the company didn't elicit a response.

After their review petition against the October order was rejected, these telcos filed a modification plea with the apex court, hoping to be allowed to negotiate a longer payment tenure and waiver of interest and penalties with the DoT.

At a hearing of the modification plea on Friday, the top court asked why they shouldn’t be prosecuted for contempt for not paying their AGR dues by the deadline.

After being rebuked by the Supreme Court on Friday, the DoT also sent out letters on Friday and Saturday to all telcos, asking them to make AGR payments “immediately,” failing which “necessary action will be taken in terms of provisions of the License Agreements.”

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