NEW DELHI: With the Supreme Court-mandated deadline for the payment of AGR dues less than 10 days away, Bharti Airtel and Vodafone Idea (VIL) have begun gearing up to ride out the storm.
Over the past few days, Airtel has initiated a mammoth $3 billion (around Rs 21,000 crore) fundraise, while Vodafone-Idea has modified terms governing the use of around Rs 2,800 crore raised as part of an earlier Rs 25,000 crore rights issue last year.
The preparations come even as a petition challenging the SC’s October 24 verdict on the definition of adjusted gross revenues (AGR) is set to be heard at the apex court. While the court had rejected pleas for an open court hearing, an in-chamber hearing is likely to be conducted sometime this week.
In its October 24 verdict, the SC had ruled in favour of the Department of Telecom’s (DoT) claim that AGR should also include revenue from non-telecom operations and directed telcos to pay pending dues to the DoT before January 24.
According to the DoT, telcos owe a cumulative Rs 92,640 crore in pending license fee payments and Rs 55,054 crore in spectrum usage charges (SUC). Both are calculated as a percentage of the AGRs of respective licence holders. Of this, Bharti Airtel faces liabilities of Rs 35,586 crore and VIL a cumulative Rs 53,038 crore to be paid this month.
The verdict saw the two post record losses for the second quarter of FY20, with Airtel setting aside Rs 28,450 crore and VIL Rs 25,680 crore as provisions. Their cash balances at the end of September 2019 had stood at just Rs 20,800 crore and Rs 15,700 crore respectively.
But, even as they wait for the Supreme Court to decide on their review petitions, the two are preparing to meet the cash outgo. Airtel last week floated a qualified institutional placement (QIP) offer to raise $2 billion and an issue of foreign currency convertible bonds for a further $1 billion.
“The company proposes to utilise the net proceeds for any payments that may be required to be made arising out of the judgment… in respect of the definition of adjusted gross revenue,” Airtel had said.
VIL too has freed up some funds, the company’s board approving modifications to the terms of use for Rs 2,826.1 crore of the Rs 25,000 crore raised through a rights issue in May last year.
“The DoT has now granted a two-year moratorium on deferred payment liabilities towards spectrum payments to telecom companies and hence the amount... earlier earmarked for payment of deferred payment liabilities... need not be utilised for that purpose,” it said.
However, while Airtel is expected to comfortably meet the liabilities in the absence of SC relief, VIL is not. The company’s promoters have repeatedly ruled out further capital infusions and indicated that they would wind up the business if faced with full liabilities.