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On Friday, the Supreme Court rejected the AGR Dues Reassessment plea by Vodafone Idea, Bharti Airtel and Tata Teleservices. As a result, clouds hang over the telco's viability as its shares plummeted.
Vodafone Idea finds itself in Hot Water
This order will hit Vodafone Idea the worst when it is still looking for investors to bring in at least ₹25,000 crore. The verdict will also raise fresh questions of the telco's survival. The Supreme Court bench comprising Justice N Rao and Justice Aniruddha Bose ruled, "all applications dismissed". The written order isn’t out, yet. Notably, the SC previously had rejected their self-assessments and ruled the DoT calculations as final.
All three of the telcos had self-assessed their AGR Dues, which the court has thrown out. Vodafone Idea had calculated its dues at ₹21,533 crore, Bharti Airtel at ₹13,003 crore and TTSL at ₹2,197. All three figures are miles below what the DoT says their dues are.
There is still no clarity on when to pay the first payment, a 10% upfront, towards AGR dues. The telecom departments says that the telcos should have paid another 10% by March 2021, with the rest spread over 10 years. However, the telcos argue that they have already paid more than 10%, and the next payment is due in March 2022.
What Now for Vodafone Idea?
The telco already needs to pay around ₹22,500 crore over December 2021 till April 2022 towards debt, AGR and spectrum dues. It has a debt of over ₹1.8 lakh crore and a cash balance of mere ₹350 crore. Earlier this month, the telco has already written to DoT for another year's moratorium for spectrum payments. The ruling left Vi facing dues of ₹58,400 crore in AGR payments. Of these, Vi has already paid ₹7854 crore.
This means that the next instalment Vodafone Idea has to pay will comprise of around 60% of its cash EBITDA, which will drive it in a financial crisis, as per CLSA. The brokerage firm had also said that to cover the instalment, Vi has to push its ARPU to ₹170, or 40% higher than the Q4 FY21. This means that the telco has been left with two choices - either to increase tariffs or to consider shutting down operations.