InvestorQ : What do you think are the larger implications of the Supreme Court observations in the AGR case of telecom companies?
Dawn Cherian made post

What do you think are the larger implications of the Supreme Court observations in the AGR case of telecom companies?

Answer
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Mitali Bhutta answered.
1 month ago


In a nutshell, the Supreme Court has virtually put the onus of paying dues linked to AGR charges of bankrupt firms on the acquirers. That means Reliance Jio will have to pay the AGR dues of RCOM and Bharti will pay the telecom dues of Videocon Telecom.

Take the case of Bharti Airtel. For the spectrum deal with Aircel and Videocon, Bharti Airtel had paid a paltry Rs.2000 crore. The irony is that Aircel owes Rs.12,289 crore and Videocon owes Rs.1376 crore in AGR dues to the Department of Telecommunications.

Currently, out of the total dues of Bharti Airtel at Rs.43,780 crore in AGR dues, it has only paid Rs.18,000 crore till date. Now if the dues of Aircel and Videocon are also added then the entire story changes and these deals may actually become infeasible.

The Supreme Court has already directed the DOT to furnish necessary details about spectrum shared by insolvent companies and the dues on account of shared spectrum. DOT must also submit details on spectrum arrears since 1999.

The IBC classifies AGR and Spectrum dues as operational dues which come below the financial dues in the order and that is likely to be disputed. It needs to be seen, what this means to the total IBC process.