Hey Airtel and Vodafone-Idea! Budget 2020 may have accounted for its pound of flesh

• The Indian government budgeted for aggregate gross revenue (AGR) dues in the budget document.
  
  
• The government expects ₹1,33,027 crore in telecom revenue for 2020-21.
  
  
• Telecom industry sources say they are afraid that the government is in no mood to provide any of the relaxations in dues.
  

Bharti Airtel and Vodafone Idea’s game plan of miring the payment of spectrum dues in endless legal wrangles might not bear fruit. The Indian government has already budgeted for aggregate gross revenue (AGR) dues in the budget document, but for the next financial year.


In the non-tax revenue receipts, the Indian government recorded ₹1,33,027crore in telecom revenue for 2020-21 against ₹58,989.6 crore in the current financial year. Industry experts fear that a big chunk of the 125% jump may be on account of the unpaid dues for licence fees and spectrum usage charge that has fallen on the operators after the recent loss in the case at Supreme Court.


This may also include as much as ₹25,000 crore from a proposed spectrum sale this year, according to another expert. However, in the absence of clear communication from the government, it is not clear how much the government plans to extract from the mobile operators.


Airtel owes as much as ₹35,000 crore to the government after the Supreme Court allowed them to change the definition of licencing fees to include non-telecom revenues that the licensors make - as well. Vodafone Idea owes a whopping ₹53,000 crore to the government - an amount that has threatened its ability to survive.


The Budget column has sent shivers down the spine of both the operators who have been trying every trick in the book -- including requesting extra time, staggering payments or even a relaxation in the interest and penalty amounts.


Reliance Jio has made provisions for its dues


Mukesh Ambani owned Reliance Jio has already paid up its AGR dues with no complaint, as per the January deadline suggested by the Supreme Court. However, the amount it had paid is a fraction of the other two top players - at ₹195 crore. It has made a provision for it in the third quarter earnings as well.


On the other hand, reports have also emerged that Tata Teleservices which owes around ₹14,000 crore is also known to be arranging for funds to pay up for their dues. Airtel has agreed to acquire the company, but the merger has not yet been approved.


The fact that other operators have already paid up might have an adverse effect on Vodafone and Airtel’s ability to seek relaxation. According to banking sources, few banks are keen on taking on the burden of providing a large-scale credit line to telecom operators which are in trouble.


“Finance ministry officials have called us to ask if we are lending money to telecom companies. They asked us to take permission from them if we are planning to go ahead with loans,” the senior vice president of a top bank told Business Insider.


Not just telcos, even state-owned companies like GAIL, Oil India, Power Grid and Gujarat Narmada Valley Fertilisers & Chemicals were also sent demand notices. As per telecom department’s calculations, these companies owe as much as ₹4.39 lakh crore.




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