The Supreme Court dismissed petitions of telecom operators seeking review of the definition of ‘adjusted gross revenue’ that makes them liable to pay thousands of crores in pending dues.
A bench headed by Justice Arun Mishra did not find any “justifiable reason” to entertain the review petitions filed by Bharti Airtel Ltd. and Vodafone Idea Ltd. after the apex court’s October ruling that the operators would have to include non-core revenue to calculate levies. That left them with a bill of more than Rs 50,000 crore as adjusted gross revenue dues comprising spectrum usage charges and licence fees, among others.
Bharti Airtel said it is evaluating to file a curative petition against the order. “The industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole,” the wireless operator said in a press statement.
The industry needs to continue to invest in expanding networks, acquiring spectrum and introducing new technologies like 5G. The money now required to pay punitive interest, penalty and interest on penalty which forms nearly 75 percent of AGR dues would have better served the digital mission of the country.Bharat Airtel Press Statement
The verdict will lead to a structural downgrade of the telecom industry from an oligopoly to duopoly which in the long run will not be good news for the stakeholders, said Sanjay Kapoor, former Airtel India chief executive officer. “In the short run, it might be beneficial for the surviving operators, but in the long term, the same will increase their cost to service the customers,” he told BloombergQuint.
Telecom companies now have two options—either to file a curative petition or to ask for a staggered payment, said Rajiv Sharma, head of research at SBICAP Securities. “If both options don't work, then India is heading towards a two private player market. And if that happens, then Bharti Airtel and Reliance Jio might have to raise funds to accommodate new subscribers who'll get added due to consolidation.”
Vodafone Idea and Bharti Airtel posted losses running into thousands of crores in the second quarter as they provisioned for AGR dues. They also called for a relief from the government to stay as going concerns.
Bharti Airtel raised $2 billion through a qualified institutional placement that closed on Wednesday. The proceeds will be used to pay the AGR dues and invest in the network.
Shares of Vodafone Idea closed unchanged while Bharti Airtel’s stock rose 1.5 percent compared to a 0.10 percent advance in Nifty Index.
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