Telecom service providers Bharti Airtel and Vodafone Idea (VIL) must disclose the methods by which they arrived at their assessment of AGR liabilities in the interest of minority shareholders, brokerage Kotak Institutional Securities said in a report. The agency pointed out that while the matter is currently sub judice, these details should be released once the legal process is over.
“While we appreciate the matter is still sub judice, once the legal chapter is over, Airtel and VIL could (and should) disclose their self-assessment workings highlighting the areas of difference versus the DoT math. Even as this isn’t a statutorily mandated disclosure, we believe the minority shareholders deserve to know,” Kotak Institutional Equities said in the report.
The brokerage went on to point out that Bharti Airtel and VIL’s self-assessed dues are less than half of the Department of Telecom’s (DoT) claims and such a high discrepancy was a matter of interest to shareholders. Airtel has pegged its dues arising from the Supreme Court ruling last year at Rs 13,004 crore, while the DoT puts the estimate at Rs 35,586 crore. As for VIL, while the DoT is seeking over Rs 53,000 crore, the company’s estimates place its dues at just Rs 21,533 crore.
There was a good case for both the DoT and the telecom service providers to disclose the mathematics behind their assessments even though it was not a mandated regulatory requirement, the note added. “It would go a long way in inspiring confidence among the minority investors,” it said. “At some level, it is baffling that something as basic and critical as the base of revenues on which as much as 12-13 per cent of sector revenues are paid as regulatory levies stayed a matter of dispute on principles and calculations more than two decades after NTP-1999 (the telecom policy that established revenue share as a mechanism) was introduced and implemented,” the brokerage added. So far, VIL has paid Rs 3,500 crore out of its self-assessed liability of Rs 21,533 crore, while Bharti Airtel has paid Rs 13,004 crore in two installments. It has also deposited Rs 5,000 crore as an ad hoc payment to cover any reconciliation differences.
Different calculators
Airtel has pegged its AGR dues at Rs 13,004 crore, while the DoT puts the estimate at Rs 35,586 crore. As for VIL, while the DoT is seeking over Rs 53,000 crore, the firm’s estimates place its dues at just Rs 21,533 crore.