InvestorQ : What does the Supreme Court dismissal of the plea by telecom companies mean for companies like Bharti Airtel and Vodafone?
Chandralekha Desai made post

What does the Supreme Court dismissal of the plea by telecom companies mean for companies like Bharti Airtel and Vodafone?

Answer
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Mitali Bhutta answered.
8 months ago


This is certainly setback for the telecom companies because now they have to pay the entire Rs.147,000 crore within the next couple of weeks. That is because, the Supreme Court on Thursday dismissed pleas, including those of Bharti Airtel Ltd and Vodafone Idea Ltd, to review its earlier judgement. Currently, Bharti has to pay Rs.35,586 crore to the government by 24 January and Vodafone Idea needs to pay Rs.50,000 crore within the said date. Earlier, the telcos had asked for waiver of penalty and interest and moratorium on AGR principal payments. The court’s refusal to review its order is a setback for the telecom operators.

Experts are now of the view that there was very little chance of a curative plea being heard and that there may not be any fresh grounds. The government may not tinker much with the order but can probably help restructure payment deadline for dues. That is something the government is already open to. While Bharti has already raised $3 billion in this regard and they may see the AGR charges through, the real challenge is for companies like Vodafone as they may have to file for bankruptcy if they are not able to raise the required funds.

Clearly, Bharti is not too happy and has contended that the order will erode the viability of the sector even further. Telcos are already under tremendous financial stress. In addition, the telecom industry also needs to invest in expanding networks, acquiring spectrum and introducing new technologies like 5G. All these are huge investments and it needs to have the requisite resources for the same. In fact, Bharti, Vodafone and other operators challenged the methodology used by DOT to calculate AGR.