Vodafone Idea says it will pay AGR dues to DoT

Cash-strapped telco hopes for reprieve from the Supreme Court.

Vodafone Idea on February 15 said it is assessing the amount that can be paid towards AGR dues, even as it flagged concerns over the continuation of its business. File

Beleaguered telecom firm Vodafone Idea on February 15 said it proposed to clear its Adjusted Gross Revenue-related dues in the next few days. But it warned that the company’s ability to continue as a going concern would depend on a favourable outcome of its modification plea in the Supreme Court.

The statement comes a day after the court asked the managing directors of telecom firms, including Vodafone Idea and Bharti Airtel, to show cause why contempt proceedings should not be initiated against them for failing to pay even a “single penny” to the government despite an October 2019 judgment .

Following the court order, after U.P. (West) and Rajasthan, the Department of Telecomunication’s (DoT) field offices in circles of Gujarat, U.P. (East), West Bengal and other zones have directed telcos to pay outstanding dues “immediately”, failing which action would be initiated based on the licence agreement.

Responding to the apex court order,

Bharti Airtel on February 14 evening committed to deposit a part payment of ₹10,000 crore as part of its AGR dues by February 20, while promising that remaining dues will be cleared “well before” March 17 —the next date for court hearing on the issue.

Industry body Cellular Operators Association of India (COAI), however, asserted that the government has “vast powers and options” to address the sector’s issues, even in light of the Supreme Court order on payment of statutory dues.

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Citing COAI’s position that the industry has to move quickly to a ₹300 ARPU (Average Revenue Per User) level to maintain its financial health, director-general of COAI Rajan S. Mathews said the Supreme Court order only makes this imperative “more urgent”.

In a filing to the stock exchanges, Vodafone-Idea said that after the February 14 hearing, the company had “received letters from the Department of Telecommunications directing immediate payment”.

Stating that the company was currently assessing the amount that it will be able to pay to DoT towards the dues calculated based on AGR, it said, “the company proposes to pay the amount so assessed in the next few days”.

“As disclosed in the Company’s financial statements for quarter ending December 31, 2019, the Company’s ability to continue as a going concern is essentially dependent on a positive outcome of the application for modification of the Supplementary Order,” it added.

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The dues of Vodafone Idea , which has been the worst hit by the October 24 Supreme Court order on definition of AGR in favour of the government, are estimated to be over ₹53,000 crore, including ₹24,729 crore for spectrum usage charge and ₹28,309 crore in licence fee.

Vodafone Idea earlier this week reported a net loss of ₹6,439 crore for the October-December 2019 quarter. This was preceded by a ₹50,922 crore loss in the September quarter — highest ever by any Indian corporate, due to provisions made for statutory dues following the Supreme Court’s order.

Given the financial position of Vodafone Idea, analysts have raised concerns over India becoming a two private player market with Bharti Airtel and Reliance Jio. COAI Director General, Rajan Mathews added, “...duopoly is not in the best interest of the nation, customers or even the industry”.

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(with PTI inputs)