Here’s what will happen if Airtel and Vodafone Idea get a 10-year timeline to repay AGR dues

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Here’s what will happen if Airtel and Vodafone Idea get a 10-year timeline to repay AGR dues
Airtel / Vodafone Idea / Business Insider India
  • During the adjusted gross revenue (AGR) dues hearing, the Supreme Court had some tough words for Vodafone Idea, Airtel and the government’s counsels.
  • Telecom companies have sought more time but the apex court made it clear that the 20-year window for AGR dues repayment is too long.
  • If a 10-year repayment timeline is fixed, Vodafone Idea will have to pay ₹5,034 crore per year at a time when it has posted the highest ever loss by an Indian company at ₹73,878 crore for FY20.
  • In this case, Vodafone Idea will need to hike tariffs and increase its average revenue per user by 73% to sustain its operations.
  • Check out the latest news and updates on Business Insider.
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The Supreme Court concluded hearing in the adjusted gross revenue (AGR) dues case, talking tough and making it clear that the 20-year window for AGR dues repayment is too long.

Both Airtel and Vodafone Idea have sought a 15-year repayment timeline, but here’s what will happen if the Supreme Court grants only a 10-year timeline for AGR dues repayment.

According to brokerage firm Motilal Oswal, a smaller repayment timeline will be a big setback for Vodafone Idea which is battling for its survival.


“This is a big setback, especially for Vodafone Idea (VIL), which is under dire liquidity stress. A lower payment tenure may put pressure on VIL’s cash flows,” the firm said in its latest report.

How will this impact Airtel and Vodafone Idea?
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While the Supreme Court concluded the hearing, it reserved its order on the timeline to be fixed for repayment.

From the hearing, it is evident that the 20-year option will not be acceptable to the top court.

Here’s what the annual outflow for Airtel and Vodafone Idea will be like for 10, 15 and 20-year repayment timelines:

Company10-year (in crore)15-year (in crore)20-year (in crore)
Vodafone Idea₹5,034₹3,356₹2,517
Airtel₹2,598₹1,732₹1,299
*These are annual cash outflows

Motilal Oswal suggests Vodafone Idea will need a major tariff hike of 73% to service its obligations. This will translate to an increase of ₹85 in average revenue per user (ARPU), from the existing ₹121.
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“We maintain our stance on VIL – the company has a bleak future with high cash requirement,” it further added.

On the other hand, the brokerage firm is bullish on Airtel, maintaining its target price of ₹690. This is an upside of almost 22%, based on the closing price as on July 21.

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