Government aid is required to sail Indian telcos from AGR storm
By MYBRANDBOOK
The telecom sector in India, which is already reeling under a debt of around US$54.46bn, has come under more pressure due to the recent Supreme Court ruling on adjusted gross revenue (AGR) dues, says GlobalData, a leading data and analytics company.
Since 2005, there has been an ongoing dispute between the Department of Telecommunications (DoT) and the telcos in India regarding the definition of AGR, with the telcos asserting that only core revenue is considered for AGR calculation.
In October 2019 the Supreme Court ended more than a decade old proceedings by accepting DoT’s definition. In February 2020, the Supreme Court came down heavily on telcos and directed them to pay the AGR liabilities at the earliest. As per DoT estimates, Bharti Airtel owes the government around US$4.97bn and Vodafone-Idea owes around US$7.40bn in AGR dues.
An analysis of GlobalData’s Mobile Broadband Forecast Pack reveals that Vodafone-Idea will have 282.5 million subscribers with 23% market share by 2020 end. As AGR dues of Vodafone-Idea are highest, it is a mammoth task for the company to repay the dues without any support from the government. Moreover, payment of such hefty dues will impact the company’s investments in future projects such as smart cities and 5G.
Antariksh Raut, Senior Research Analyst at GlobalData, says: “The payment of AGR dues will have least impact on Reliance Jio as the operator entered into the Indian market quite late in 2016. Bharti Airtel has some potential head-room to take on the burden of AGR dues considering its financials. However, Vodafone-Idea is in worst shape having cash and cash equivalents of US$1.75bn, as per December 2019 results, which is not at all sufficient enough to pay their statutory dues.”
While the Finance Ministry is keen to work out relief measures for the sector, it is against providing any concession on payment of penalty as it may lead to a similar demand from other sectors. However, DoT later filed an application in the Supreme Court, requesting that telcos be allowed to spread the payment of AGR dues over 20 years or less, at a reduced interest rate of 8%. A decision on the same will be taken on next Supreme Court hearing which is currently on hold due to Covid-19 lockdown till 3rd May 2020.
Raut concludes: “The telecom sector plays an important role in the development of a nation, and in India, it is expected to contribute 8.2% of GDP by FY20 once 5G is functional. Also, futuristic projects such as smart cities are fairly dependant on the strength of the telecom sector. But the recent ruling on AGR dues has led financial burden on incumbent operators which may impact such projects. As a result, the government has to put in measures to provide some relief to the operators so that they do not enter into fresh debts.”
BREAKING NEWS
TECHNO TRENDS
Nazara and ONDC set to transform in-game monetization with ‘
Nazara Technologies has teamed up with the Open Network for Digital Comme...
Jio Platforms and NICSI to offer cloud services to government
In a collaborative initiative, the National Informatics Centre Services In...
BSNL awards ₹5,000 Cr Project to RVNL-Led Consortium
A syndicate led by Rail Vikas Nigam Limited (abbreviated as RVNL), along wi...
Pinterest tracks users without consent, alleges complaint
A recent complaint alleges that Pinterest, the popular image-sharing platf...
E-Magazine
TECHNOTAINMENT
Netflix adds 'Moments' feature for saving, sharing scenes from
Netflix has introduced a new “Moments” feature on its mobile app, whic
Jacqueline Fernandez come together with YouTuber Mr. Beast for
Jacqueline Fernandez has partnered with American YouTuber Mr. Beast to b
MOVERS & SHAKERS
Visa elevates Rishi Chhabra as new Country Manager for India
Rishi holds a Master’s in Industrial Engineering from The Ohio State Univ
Genesys welcomes Albert Nel as Senior VP and Regional Sales Le
Genesys continues to deepen its investment in the APAC region. Earlier this
OPEN YOUR EYES
INTERVIEWS
Cisco building a trusted and resilient future for the nation
Security is foundational to everything Cisco does and customers insist on e
Alcatel-Lucent Enterprise Carrying a 100 year legacy ahead
A good amount of R&D works and global support services are operated out of
HOT PICK
SonicWall Launches TZ80: A Powerful Solution for Remote Office
SonicWall announced today the launch of the TZ80, a groundbreaking securit
Gigabyte X3D Turbo: A Gaming Revolution
GIGABYTE X3D Turbo Mode is a cutting-edge feature that unifies cores distr
MAKE IN INDIA BRANDS
FRESHWORKS TECHNOLOGIES PVT. LTD.
PDRL - Passenger Drone Research Pvt. Ltd.
BHARAT ELECTRONICS LTD.
DRUVA SOFTWARE PVT. LTD.
ICONS OF INDIA
Icons Of India : NEERAJ MITTAL
He started his career as an IAS Officer in 1992. He has held various a...
Icons Of India : Girish Mathrubootham
Girish Mathrubootham is the Founder of Freshworks (previously known ...
Icons Of India : Dr. Arvind Gupta
Arvind Gupta is the Head and Co-Founder of the Digital India Foundatio...
PARTNER SPEAKERS
PSU
LIC - Life Insurance Corporation of India
LIC is the largest state-owned life insurance company in India...
GeM - Government e Marketplace
GeM is to facilitate the procurement of goods and services by various ...
EESL - Energy Efficiency Services Limited
EESL is uniquely positioned in India’s energy sector to address ener...
VIDEOS
Top 25 Brands
Global Indian industry
Indian Tech Talent Excelling The Tech World - Thomas Kurian, CEO- Google Cloud
Thomas Kurian, the CEO of Google Cloud, has been instrumental in expan...
Indian Tech Talent Excelling The Tech World - JAYASHREE ULLAL, President and CEO - Arista Network
Jayshree V. Ullal is a British-American billionaire businesswoman, ser...
Indian Tech Talent Excelling The Tech World - Vinod Dham, Founder & Executive Managing Partner, IndoUS Venture Partners
Vinod Dham, known as the “Father of the Pentium Chip,” has left an...
STARNITE AWARDS 2024
ITFORUM 2024
CMO of the Year
WOMEN LEADERSHIP
IMAGE GALLERY
TRENDS IN TECHNOLOGY
MORE VIDEOS
ADVERTISEMENTS
TECHNOLOGY DISRUPTION
UNICORNS REVOLUTIONISING
