Airtel, Vodafone Idea and Reliance Jio have till October 29 to opt for the AGR dues moratorium
- The government has set October 29 as the deadline for opting for adjusted gross revenue (AGR) dues moratorium.
- The moratorium offers a time-freeze of four years from making payments for AGR dues.
- The government has also given 90 days to telcos to decide if they wish to convert the accrued interest into equity.
AdvertisementThe Indian government had announced a moratorium of four years to telcos for making payments towards their adjusted gross revenue (AGR) dues as part of the telecom relief package last month.
Now, Airtel, Vodafone Idea and Reliance Jio have been given a deadline of October 29 to decide if they wish to opt for the payment moratorium.
Additionally, the telcos have been given 90 days to respond whether they wish to convert the accrued interest into equity.
As per the media report, the deadline was intimated to the three telcos in a letter sent by the Ministry of Finance on Friday.
As per a senior government official, companies that opt for the moratorium will have to provide their historical audited financial statements. Additionally, listed companies would also be required to provide their historical share value.
What are the benefits of the moratorium?
The companies who avail the moratorium facility will have to pay interest on the amount and period of moratorium, since the government would have to protect its revenue. Both banks and telcos will benefit from de-stressed balance sheets thanks to this relief measure.
Apart from this, the government has announced that instead of compounding interest on spectrum dues on a monthly basis, it will now do so on an annual basis. This should drastically reduce the impact of compounding and offer major relief to telecom players who have to pay AGR and spectrum dues.
What is AGR?
In 1999, the government and telecom operators shifted to a revenue-sharing fee model that requires them to share a part of their adjusted gross revenue (AGR) with the government as annual licence fee and spectrum usage charges.
AdvertisementAGR is defined in the license agreements entered between the Department of Telecommunications (DoT) and the telecom operators.
Here’s how much Vodafone Idea and Airtel owe the government in the form of AGR dues:
|Company||Total AGR demand (in crore)||AGR dues paid (in crore)||Balance AGR dues (in crore)|
Source: AGR dues case in the Supreme Court
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