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SC AGR hearing LIVE: How will govt recover money from insolvent telcos? AGR dues payment verdict awaited – The Financial Express

DoT estimates that telecom companies owe a total of Rs 1.19 lakh crore, of which it has received Rs 26,896 crore so far, with balance at Rs 92,520 crore.

SC AGR hearing LIVE: The Supreme Court started hearing the case on telecom companies going under insolvency. Senior counsel Harish Salve and Ranjit Kumar appeared for State Bank of India (SBI) while Shyam Divan appeared as Reliance Communication’s (RCom) resolution professional. Meanwhile, telecom companies such as Bharti Airtel and Vodafone Idea wait for the verdict on staggered payment schedule of adjusted gross revenue (AGR) dues. Earlier this week, the government told the Supreme Court that the spectrum held by bankrupt telecom operators cannot be sold as part of their resolution plans. A bench led by Justice Arun Mishra told solicitor general Tushar Mehta that he should come prepared on Friday with a plan for recovery of dues from the companies under insolvency. “And whether spectrum can be sold by these telecom companies? What is the government’s stance? What is the government’s plan to recover dues from RCom?” the bench asked.

Reliance Communications has AGR dues worth Rs 25,000 crore, Aircel’s has around Rs 12,389 crore. So far, Bharti Airtel has paid Rs 18,004 crore out of total dues of Rs 43,000 crore; and Vodafone Idea paid Rs 7,854 crore out of its total AGR dues of around Rs 58,000 crore. DoT estimates that telecom companies owe a total of Rs 1.19 lakh crore, of which it has received Rs 26,896 crore so far, with balance at Rs 92,520 crore.

RCom’s resolution professional said that Ericsson has filed application under Section 9 for insolvency. 

Shyam Divan gave a timeline for Ericsson and China Development cases in NCLT. 

Senior counsel Harish Salve and Ranjit Kumar appeared for State Bank of India (SBI). Shyam Divan appeared as Reliance Communication’s (RCom) resolution professional

The Supreme Court began hearing on adjusted gross revenue (AGR) dues of telecom companies such as Bharti Airtel and Vodafone Idea. 

Bharti Airtel shares were still trading over 1.5 per cent down at Rs 527.15 apiece, as compared to a 1.25 per cent fall in the benchmark S&P BSE Sensex in late afternoon deals.

Check live prices: Bharti Airtel

Vodafone Idea’s net operating revenues slipped 9.3% on-quarter basis and 5.4% on-year basis to 10,659 crore. Average Revenue Per User (ARPU) has also been falling for Vodafone Idea, now at Rs 114 against Rs 121 in the previous quarter. Kotak Institutional Equities in a report said that the numbers were hit by the coronavirus which affected customers and a weakening subscriber mix for the telco.

Motilal Oswal Financial Services in its July report said for a 20-year timeframe, Vodafone Idea would require to pay Rs 5,100 crore. Owing to the high leverage and huge cash requirements, the brokerage firm sees a bleak future for Vodafone Idea.

Research and brokerage firm Motilal Oswal Financial Services estimated that Vodafone Idea may have to pay Rs 6,000 crore per year if the court grants a 15-year timeframe. “Considering dues at 8% interest rate VIL would require to pay an annual amount of Rs 5,900 crore if the SC grants a time frame of 15 years,” the brokerage firm said.

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Bharti Airtel has paid Rs 18,004 crore out of total dues of Rs 43,000 and Vodafone Idea paid Rs 7,854 crore out of its total AGR dues of around Rs 58,000 crore, so far.

Bharti Airtel, Vodafone Idea scaled down their demand from 20-year timeline to 15 years. Tata Teleservices sought 7-10 years for the payment of AGR dues.

In the previous hearing on Aug 10, the DoT’s counsel, the solicitor-general, told the court that spectrum belongs to the government and is given to the telecom operators on lease and it cannot be put up for sale as part of the resolution plan. The bench replied, that’s fine but if you delay in filing appeal how can you prevent spectrum from being sold off?

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On July 20 during the course of hearing in the AGR matter, the SC had sought all records of RCom, Aircel, and Videocon Telecommunications to ensure that these companies did not misuse the insolvency and bankruptcy code (IBC) to escape their AGR dues. The three companies, which filed for bankruptcy, together owe around Rs 40,000 crore of the total Rs 1.67 lakh crore owed by various telecom companies as AGR dues.

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The case of bankrupt telecom operators in the adjusted gross revenue (AGR) case took a new turn on Monday when the government told the Supreme Court that the spectrum held by such firms cannot be sold as part of their resolution plans. This raises uncertainty regarding the resolution plans of Reliance Communications and Aircel, where the respective plans are at different stages.

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The Department of Telecommunications (DoT) has only itself to blame for the mess it has created with regard to the adjusted gross revenue dues of the insolvent companies like Aircel and Reliance Communications. First, it did not file an appeal on time in the appellate tribunal when in November 2019 the National Company Law Tribunal (NCLT) dismissed its petition that bankrupt Aircel cannot put spectrum given by the government, up for sale as part of its resolution plan. Second, it once again delayed filing an appeal in the Supreme Court against the NCLAT order dismissing its appeal as time-barred.

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High LF and SUC crippled the industry—even before RJio came in—and, as a result, the government’s revenues fell from Rs 70,241 crore in FY17 to Rs 39,345 crore in FY19 as there were no auctions in 2017, 2018, or 2019; FY20 revenues rose to Rs 58,989 crore, thanks to part-payment of AGR dues: The Financial Express opinion

Even if Vodafone Idea gets a 15-20 year window in which to pay its AGR dues, it is likely to remain a pale shadow of itself until its promoters are willing to pump in a lot more equity for capex, including the purchase of 5G spectrum in a year or so. Ideally, the government should scrap its licence fee (LF) and spectrum usage charges (SUC) as it is charging market-prices for spectrum; LF and SUC were charged when spectrum was mostly given out free: The Financial Express opinion

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Reliance Communications share price surged nearly 5 per cent at Rs 2.39 apiece, as the government will submit its plan for recovery of dues from the companies under insolvency.

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The AGR-dues case in the Supreme Court (SC) just got a lot more interesting with SC looking at whether there was mala fide in telcos like RCom and Aircel being at the NCLT as this puts a question mark over their ability to repay their dues; RCom has AGR dues worth Rs 25,000 crore, and Aircel around Rs 12,389 crore.

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Vodafone Idea share price slipped over a per cent lower to trade at Rs 8.94 apiece on BSE, as compared to a 1.38 per cent fall in the S&P BSE Sensex.

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Bharti Airtel share price fell 1.27 per cent to Rs 528.85 apiece on BSE ahead of SC hearing on AGR dues of telecom companies. The quoted day’s lows of Rs 525.10 apiece, so far.

Check live prices: Bharti Airtel