Voda Idea to pay AGR dues but uncertain on future course; DoT mulls penal action

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New Delhi, Feb 15 () Debt-ridden telecom operator Vodafone Idea on Saturday said it is assessing the amount that can be paid towards AGR dues, even as it flagged concerns over the continuation of its business.

The company has maintained that continuation of its business will depend on the outcome of its modification plea filed before the Supreme Court.

The firm is seeking more time to pay the dues, which is estimated to be over Rs 52,000 crore.

The Department of Telecom, which faced the ire of the apex court, is mulling penal action against telecom operators for failing to pay in time the adjusted gross revenue dues.

State Bank of India has expressed concern on the situation and said banks will have to pay the price if any telecom company shuts down.

Besides the AGR dues, Vodafone Idea's gross debt, excluding lease liabilities, was Rs 1,15,850 crore as on December 31, 2019, including deferred spectrum payment obligations of Rs 88,530 crore due to the government.

The apex court on Friday came down heavily on the telecom department for not taking steps to recover statutory dues, estimated to be around Rs 1.47 lakh crore, from operators including Bharti Airtel, Vodafone Idea, Tata Teleservices, among others.

The DoT issued fifth and final notice to telecom operators on February 14 for making payment on the same day but none of the companies paid the dues.

Vodafone Idea said that it has received notice from the DoT directing immediate payment.

"The Company is currently assessing the amount that it will be able to pay to DoT towards the dues calculated based on AGR (Adjusted Gross Revenue), as interpreted by the Hon'ble Supreme Court in its order dated 24 October 2019. The Company proposes to pay the amount so assessed in the next few days," Vodafone Idea said in a BSE filing.

Vodafone Idea Ltd (VIL), whose liability is estimated to be around Rs 53,038 crore, including Rs 24,729 crore of spectrum dues and Rs 28,309 crore in licence fee, has already warned of shutdown if no relief is given.

"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," the company said in the filing.

The next date of hearing is scheduled for March 17, 2020.

BofA Securities, in a note on Friday noted VIL is not in a position to be able to make the USD 3 billion payment upfront, while the recent QIP by Bharti makes them better placed to do so.

"If therefore it finally comes to the telcos making an upfront payment - VIL may look to shut shop, and in that event we see the possibility of government intervention to resolve the situation," it added.

SBI Chairman Rajnish Kumar on Saturday said banks will "have to pay the price" in case any telecom firm files for bankruptcy.

"If there is a negative impact on any enterprise, it impacts a larger ecosystem, whether it is banks, whether it is employees, whether they are vendors, consumers, so everybody gets impacted. So, that impact, when it comes, we will have to pay the price," Kumar said, when asked about the impact on banks if telcos move towards bankruptcy.

RBI Governor Shaktikanta Das on Saturday said the central bank will have internal discussions in case there are any issues arising out of the Supreme Court order regarding adjusted gross revenue (AGR) dues to be paid by telecom companies.

Airtel owes nearly Rs 35,586 crore, including licence fee and spectrum usage charge, to the government.

Vodafone Idea is staring at dues worth Rs 53,000 crore that includes up to Rs 24,729 crore of spectrum dues and another Rs 28,309 crore in licence fee, Tata Teleservices around Rs 13,800 crore, BSNL Rs 4,989 crore and MTNL Rs 3,122 crore.

Out of Rs 1.47 lakh crore, around Rs 1.13 lakh crore is likely to be recovered, while other companies - which are liable to pay AGR dues - have folded up their businesses. Reliance Communications and Aircel are going through insolvency proceedings.

Public sector companies, that do not sell telecom services, owe the DoT around Rs 2.65 lakh crore, with GAIL India alone owing around 65 per cent of the total amount. However, these PSUs have the option to approach the court for a legal recourse.

Airtel responded to the DoT order of February 14 by offering to pay Rs 10,000 crore by February 20 and the remaining before March 17.

The telecom department is mulling penal action against telecom operators for failing to pay in time the adjusted gross revenue dues as directed by the Supreme Court, according to an official source.

With Saturday being a holiday in various offices, the Department of Telecom (DoT) is likely to wait till Monday evening for the payment before sending out the next set of notices with updated penalty and other punitive action as per the licence norms, the source told .

"The DoT has sent five notices to telecom operators with reminders and penalty provisions on October 31, November 13, December 2, January 20 and now on February 14. Telecom operators are bound to pay as per the SC order and the department never gave them any extension. Now, telecom operators are saying they will pay a sizable amount by Monday but action will be taken against them for every delay," the official said.

The Supreme Court has asked managing directors and directors of all defaulting telecom companies to be present in court on March 17 in case they fail to comply with its order. PRS BAL