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Voda-Idea asks SC to stagger AGR payment over 20 years
Telco says may have to cease ops if forced to submit guarantees.
Vodafone Idea Ltd said on Thursday that it will be forced to cease operations if the company has to submit bank guarantees for outstanding government dues as directed by the Supreme Court.
“Vodafone’s position is ‘precarious’ and is not in a position to give any more guarantees,” senior advocate Mukul Rohtagi, representing the company, told the court.
“The ship is barely afloat. The only way to pay AGR (adjusted gross revenue) dues is to stagger payments over 20 years,” he said, reiterating that loss-making Vodafone Idea will have to shut operations, impacting 11,000 employees, if asked to pay its dues up front.
The move brings to fore the long-drawn issue of how some telecom firms, facing high debt and mounting losses, will be able to gather the large sums to pay government dues.
Defaults by telecom operators may also spell trouble for banks, which have a large exposure to the industry.
Bharti Airtel Ltd, India’s second-largest telecom operator by users, sought 20 years to pay its dues, saying that it is not a “fly by night” operator.
Hearing the case on dues related to AGR of the telecom firms, the top court on Thursday directed them to furnish details of revenues earned and taxes paid in the past 10 years. This was after the telcos submitted before the apex court that furnishing bank guarantees under their current strained financial health will hamper planned investments.
The telcos said they fear the department of telecommunications (DoT) may encash more thanRs 10,000 crore worth of bank guarantees if the telcos default on their payments.
Vodafone Idea has so far paid around Rs 7,000 crore of its total dues of Rs 21,533 crore, which it has estimated on its own.
The government, however, pegs the company’s dues at Rs 50,000 crore.
Goldman Sachs has estimated Vodafone Idea’s net debt at $14 billion as of December 2019.
Asked about personal guarantees by directors, Rohatgi said, “I wonder how independent directors can be asked to give guarantee for dues as high as Rs 55,000 crore”.
He sought two weeks to reply to the court.
Senior advocate Abhishek Manu Singhvi, representing Bharti Airtel, said the operator has already paid Rs 18,000 crore of its self-estimate of Rs 13,000 crore, against DoT’s estimate of Rs 35,000 crore.
Similarly, Tata Teleservices has paid Rs 2,197 crore in AGR dues, followed by an additional Rs 2,000 crore to cover reconciliation differences, against DoT’s estimate of Rs 14,000 crore.
Earlier in the day, the central government told the court that it is withdrawing the demand for 96% of around Rs 4 lakh crore AGR dues raised against PSUs.
