Airtel, Vodafone Idea Pay Part Of AGR Dues, DoT Weighs Encashing Bank Guarantees

Telecom firms scrambled to pay a part of the outstanding annual gross revenue dues, even as the Supreme Court refused to stop the government from taking coercive action for any further delay in clearing all payments.

While Bharti Airtel Ltd. paid Rs 10,000 crore and plans to pay the rest by March 16, Vodafone Idea Ltd. put in Rs 2,500 crore and promised to pay another Rs 1,000 crore before the end of the week.

Tata Teleservices Ltd. paid Rs 2,197 crore, the entire outstanding it believes to have arisen after the Supreme Court's Oct. 24 ruling on AGR dues.

The Department of Telecommunications, which drew the Supreme Court’s ire for no coercive action against telecom companies after they missed the Jan. 23 payment deadline, is now weighing the option of encashing bank guarantees given by firms when they got telecom licences, sources said.

Encashing of the bank guarantees may sound the death knell for companies, such as Vodafone Idea, which has been struggling to garner cash to pay AGR dues.

In a related development, the telecom companies have disputed the DoT's estimate of the total amount due and indicated that they will pay as per their "self-assessment".

The telecom department officials will meet on Tuesday to discuss whether or not to encash the bank guarantees, sources said, adding that “nothing is off the table” as none of the telecom firms have made the full payment.

Separately, Reserve Bank of India Governor Shaktikanta Das in an interview to Press Trust of India said that the central bank is "very closely monitoring" the fallout of the telecom crisis on lenders.

In the Supreme Court, senior advocate Mukul Rohatgi, appearing for Vodafone Idea, urged for no coercive action after the initial payment of Rs 2,500 crore is made by the end of the day and another Rs 1,000 crore by Friday. The apex court rejected the plea, giving room to DoT to take coercive action, including encashment of bank guarantee.

A financial bank guarantee is equal to two quarters of licence fee and other dues. This amount could be in the range of Rs 5,000 crore for Bharti Airtel and Vodafone Idea.

Meanwhile, Oil Minister Dharmendra Pradhan said he believes non-telecom public sector undertakings are not covered by the Supreme Court order on AGR dues.

Following the apex court’s Oct. 24 order, the telecom department sought Rs 1.83 lakh crore from GAIL India Ltd., about Rs 48,500 crore from Oil India Ltd., Rs 21,953.65 crore from Power Grid Corporation of India Ltd. and Rs 15,020 crore from Gujarat Narmada Valley Fertilizers & Chemicals Ltd. The government's demand from such companies was several times more than their net worth.

"The DoT has served notice to PSU oil companies due to some communication gap. We have placed our side after doing all legal consultations," Pradhan said, adding that telecom was not a core business for these PSUs.

The AGR issue has deepened troubles for India’s telecom industry marred by the aggressive foray of Reliance Jio Infocomm Ltd. three-and-half years ago. According to DoT, Bharti Airtel has to pay Rs 35,000 crore in statutory dues while Vodafone Idea has to furnish as much as Rs 53,000 crore. Reliance Jio, meanwhile, has already paid its Rs 195 crore to the government.