DoT decides against coercive action on telecom firms

Even as telecom majors – Vodafone-Idea and Bharti Airtel – have missed the January 23 deadline of depositing the adjusted gross revenue (AGR), the Department of Telecommunication has decided not to take the coercive action against the erring companies.

Highly placed sources from both the companies told DH that they have written a letter to Department of Telecommunication (DoT) stating that while they will comply with the Supreme Court order on paying adjusted gross revenue (AGR) dues, they will wait till next week, when their “modification” petition is heard in the apex court, before paying.

The DoT has, in turn, communicated to the controller of communications accounts (CCA) in various circles across the country not to take any “coercive action” against telecom operators if they fail to comply with the Supreme Court order on repayment of AGR dues, till further orders.

Vodafone Idea and Bharti Airtel face statutory dues of Rs 53,039 crore and Rs 35,586 crore, respectively, as per government disclosures to parliament. While Airtel has managed to raise the funds to suffice for the loss, analysts believe that this will become the existential threat for embattled Voda-Idea. Many analysts are expecting a pre-2000 duopoly in the Indian markets due to this, with only Airtel and Reliance Jio left in the race.

When contacted, both the companies declined to comment on the issue.

Jio pays dues

On the contrary, Mukesh Ambani-controlled Reliance Jio has paid its entire dues of Rs 195 crore on Thursday and it had provisioned for the liabilities worth Rs 177 crore in its latest financial results.

Jio had not been party to the review petition and had a different stance on the matter. The review petition by the telcos seeks extension in the deadline to pay the dues. Telcos, including the Voda-Idea, Airtel, Jio, erstwhile Tata Telecommunication and now bankrupt Reliance Communication owe a whopping sum of Rs 1.47 lakh crore to the DoT for the AGR – the usage and licensing fee that telecom operators are charged by the DoT.

Last week, the Franklin Templeton Mutual Fund – known for being conservative in approach – announced a 100% write-down on Voda-Idea debentures after the Supreme Court (SC) rejected the review petition by telecom operators over the payment of AGR dues. This resulted in a 4-7% erosion in value for its six schemes exposed to Vodafone Idea debt. Other fund houses -- UTI MF, Nippon MF, and Birla MF – have written down the debentures on a valuation basis.

The 45 MF schemes have a total exposure of Rs 3,389 crore to the telecom firm. Among them, Franklin holds papers worth over Rs 2,000 crore, Aditya Birla MF and UTI MF a little over Rs 500 crore each, and Nippon India of nearly Rs 200 crore.

Sources in Sebi said that the market regulator is worried about the impact of write down on the retail investors in the company.