Vi (Vodafone Idea) To Take Big Decision To Lower AGR Dues. Vodafone Idea (Vi) is considering exhausting all legal options, including filing a review petition in the Supreme Court if necessary, in the hope of having its adjusted gross revenue (AGR) dues reduced, several people familiar with the matter said.
The cash-strapped telco, which has pegged reduction in AGR dues as among key factors to ensure its viability, is likely to start with filing a review petition against the top court’s order last week junking pleas filed by itself, Bharti Airtel and Tata Teleservices, seeking a recalculation of their AGR liabilities due to arithmetical errors.
“Vi is expected to move SC again with their review petition,” a person aware of the developments told ET. “If the appeal gets rejected, then the telco still has the option of a curative petition.”
In a curative petition, the last constitutional resort for grievance redressal, one highlights patent injustice and appeals that something wrong will happen if the court does not intervene.
Vodafone Idea faces AGR dues of Rs 58,254 crore, of which it has paid only Rs 7,854 crore. The company had claimed that DoT’s AGR dues calculation was erroneous and estimated its dues at around Rs 25,000 crore.
An appeal for review is made when a person or company feels that the court has left out certain matters.
But review petitions have rarely succeeded historically.
For example, the three telcos had filed a review petition against the AGR order of September 2019 which widened the scope of AGR to include non-telecom items and left the three facing over Rs1.19 lakh crore in dues. In January 2020, the top court rejected the review.
“Chances of SC listening to a review petition and giving a favourable response for the telco is slim,” a lawyer said. “But they have to take this route if they want to go for curative later.”
It’s not yet clear if Airtel and Tata Teleservices will also file similar appeals.
Vi, which was borne out of India Inc’s largest merger between Vodafone India with Idea Cellular, is desperate for a favourable outcome that could prevent bankruptcy.
Brokerage firm CLSA in a report said no recalculation will mean the annual instalment of Vi’s AGR dues will be around 60% of 2022 cash Ebitda, driving it into a financial crisis.
India’s only loss-making private telco is in desperate need of funds to pay off its financial and statutory dues and resuscitate its operations. It has been trying to raise Rs 25,000 crore since last September but hasn’t been able to conclude any deal despite talking to several marquee investors including an Oak Hill-led consortium, US private equity firms KKR and Apollo Global. Its cash balance at March end stood at Rs 350 crore.
Brokerage Kotak said that as things stand, Vi’s cash flows are likely to fall short by at least $3.1 billion (Rs 23,500 crore) in FY2023, given an AGR instalment of Rs 9,000 crore, spectrum payments of Rs 15,900 crore, interest cost of Rs 2,500 crore on non-government borrowings, and low run-rate of capital expenditure at Rs 6,200 crore.
Analysts said Vi would require several things to fall in place to continue operating as a going concern, including a further moratorium from the government on spectrum payments, a coordinated tariff hike in the industry supported by floor pricing and a material reduction in licence fees and spectrum usage charges (SUC) to improve operating economics of the telecom sector.
The carrier has already requested the telecom department to allow it one more year – till FY23 – to make its over Rs 8,000 crore payment which falls due in April 2022.
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