InvestorQ : Can you share the highlights of the Supreme Court judgment on telecom companies and how it would impact Bharti Airtel, Vodafone and Reliance Jio?
Crowny Pinto made post

Can you share the highlights of the Supreme Court judgment on telecom companies and how it would impact Bharti Airtel, Vodafone and Reliance Jio?

Answer
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3 weeks ago


Here are some of the highlights of the AGR order passed by the Supreme Court on 01 September 2020.

· Telecom companies will be allowed a maximum time of 10 years to pay up the full AGR dues to the government. The first installment will be payable in March 2021.

· The onus of ensuring timely payment of 10% of dues each year will be on the CEO of the telecom company who will be held individually liable for any default.

· The Supreme Court reiterated that there was no question of any review on the quantum of revenues that had to accrue to the government and this was more of facilitation.

· Telecom companies owe Rs.140,000 crore to the government towards AGR and spectrum dues over the last many years, which will be defrayed.

· Vodafone idea has the largest outstanding of over Rs.50,000 crore followed by Bharti Airtel which has Rs.25,000 crore yet to be paid.

· The Supreme Court has reserved its order on whether the acquirers of the spectrum like Reliance Jio and Bharti Airtel will have to pay the Spectrum dues of bankrupt units.

· Reliance Jio is buying spectrum from RCOM while Bharti is buying spectrum from Aircel and Videocon Industries.

· However, the court has left it to the discretion of the NCLT as to whether the spectrum can be transferred as part of the resolution process or not.

· This move will induce promoter groups like Vodafone PLC and the Aditya Birla group to infuse capital into the company, now that there is clarity on future liability.

Clearly, Vodafone has reason to be happy although financial viability is still an issue for the company. For Jio and Bharti, the real benefits will depend on whether they have to pay the spectrum for the acquired companies or not. It may be early days still but surely the sentiments for telecom have turned positive.