Voda Idea, Airtel may offer spectrum, assets, tax refunds as securities for AGR payments

New Delhi: Vodafone Idea and Bharti Airtel are contemplating providing their spectrum, tangible belongings and tax refunds as safety to the Supreme Court, which requested them to indicate how they are going to pay their statutory dues, senior executives stated.

“There are ample belongings within the books of telecom companies to supply for safety towards staggered fee over 20 years,” a senior business government advised ET on situation of anonymity.

The Supreme Court requested the telcos to submit throughout the subsequent 5 days their roadmap for fee of dues and the timeline together with the safety they are going to furnish to guard future funds to the federal government.

Bharti Airtel had raised $three billion by means of a mixture of a rights situation and an abroad sale of convertible bonds because it ready to pay its adjusted gross income dues in January.

Equity analysis agency SBICAP Securities estimates that Bharti Airtel is healthier positioned to pay its excellent dues.

“Bharti, in our view, is relatively better placed and possibly could furnish bank guarantees or other possible solutions, as staggered payments will help Bharti to keep investing in network, address market share, and even address regulatory dues,” it stated.

Airtel and Vodafone Idea did not reply to emailed queries.

Cash-strapped Vodafone Idea expressed its incapability to shore up cash to pay the AGR dues to the federal government at one go, saying it could be compelled to shut. Mukul Rohatgi, the corporate’s counsel, stated it wouldn’t be doable to furnish financial institution ensures, given the monetary constraints.

According to business estimates, the telco has web tangible belongings price Rs 40,000 crore. Its spectrum holding is valued at virtually Rs 1.2 lakh crore, other than the Rs 8,000 crore in enter tax credit and Rs 12,000 crore in revenue tax refunds, which it has been pursuing with the federal government. The firm has web debt of over Rs 1.1 lakh crore. The spectrum liabilities are estimated at $11.7 billion, in accordance with SBICAP Securities.

“Even though the company does have significant value in its plant and equipment, it might be an uphill task to convince the court of security against this asset as there might not be many buyers for it,” stated Rohan Dhamija, managing companion for Middle East and South Asia at Analysys Mason.

Industry officers stated the telcos are anticipated to hunt readability from the Department of Telecommunications on the quantity that must be paid, on condition that the determine has various because the Supreme Court’s October 24 order. Responding to the apex court docket’s order, telcos are more likely to keep on with a most 20-year roadmap as proposed by the telecom division.

According to a cupboard choice taken on March 13, the federal government proposed a formulation that features spreading the AGR dues over 20 years at a reduced price of 8% and freezing curiosity and penalty elements as of October 24, when the Supreme Court dominated in favour of the Centre’s calculation of AGR.

The authorities’s proposal says the online current worth will likely be “protected using the discount rate.”

As reported by ET on March 16, in addition to these proposals, the federal government is contemplating a broad package deal for the competitors stricken and debt-ridden sector, together with offering a sovereign assure of 15% of AGR dues if an operator had been to strategy a public sector financial institution for a mortgage. This was taken given the stress within the sector earlier than the Covid-19 outbreak.

Vodafone Idea has paid Rs 6,854 crore of the AGR dues it owes to DoT, which the corporate assessed at Rs 21,533 crore. According to DoT’s most up-to-date estimate filed with the Supreme Court, the corporate owes Rs 58,254 crore.

Bharti Airtel claims to have paid its total dues of Rs 13,004 crore and a further Rs 5,000 crore. However, DoT estimates its dues at Rs 43,980 crore.

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