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Thursday, April 22, 2021

AGR verdict: SC orders telcos to pay AGR dues in 10 years; Vodafone Idea cracks 15%, Airtel jumps 5%

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NEW DELHI: Shares of Vodafone Idea crashed but those of Bharti Airtel gained after the Supreme Court on Tuesday ordered telecom companies to pay their AGR dues in 10 years. The court, however, said that they have to pay 10 per cent of the total payout by March 31.

The 10-year timeline for payment of AGR dues will begin from April 1, 2021.

Telecom companies were demanding a timeline of 15 years while the government had suggested to give them 20 years.

The apex court also mandated the MDs and chairmen of the telecom companies to submit an affidavit. Bank guarantees will also be kept alive till payments begin, the court said.

The three-judge bench added it will drop existing contempt cases against telcos but went on to say that if installments are not paid, it will restart the contempt proceedings.

The court also said that no dispute can be raised on the order, and neither will it allow any revaluation.

Following the verdict, share of Vodafone Idea slumped 17.57 per cent to Rs 8.40 while Bharti Airtel surged 4.68 per cent to Rs 538 following the verdict.

Voda Idea may face problems as it will need capital infusion and a substantial jump in revenue, which seems difficult given it is losing its subscriber base fast. The company still owes Rs 50,400 crore even after paying Rs 7,854 crore.

Other telecom stocks were also trading with cuts. Opteimus, HFCL, OnMobile, Bharti Infratel, Sterlite Tech, Reliance Communications and ITI fell in the range of 2-4 per cent.

Shares of banks, which have high exposure to telecom companies, were relatively unaffected. Nifty Private Bank was up 0.2 per cent and Nifty PSU Bank dipped 0.79 per cent. Nifty Bank was up 0.24 per cent.

The court left decision on whether to include the sale of spectrum in the IBC process to NCLT.

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