Vodafone Idea dares to dream as India could reassess AGR dues

Vodafone Idea and Bharti Airtel have been under fire this year as they struggle to pay the AGR dues imposed on them last year. Previous attempts to seek relief fell on deaf ears, despite the risk of Idea’s collapse subsequently turning the Indian telecoms market into a duopoly.

 

Since the Supreme Court finally put its foot down and demanded payment last month, Idea and Airtel both capitulated to some degree and have paid a portion of their dues. Idea paid around $470 million last month, claiming it owed just $2.9 billion after self-assessment, compared to the $7.2 billion sought by the government. 

 

Airtel similarly believes it is being overcharged based on their own assessment, paying $1.8 billion, plus an ‘extra’ $700 million, claiming this represented the full amount. 

 

"There is no versus…They asked us to self-assess, we have self-assessed and paid," said Bharti Airtel chairman Sunil Mittal on Wednesday.

 

Other major player Reliance Jio has already paid its comparatively smaller AGR debts in full.

 

Now, it seems that the Indian government could finally be responding to the desperate pleas of the telcos. India’s Minister of State for Communications, Sanjay Dhotre, said in a letter to parliament that the Department of Telecommunications (DoT) will use the telcos self-assessments to re-calculate their AGR dues.

 

There are also rumours that a relief package could be being considered, include delayed repayments, allowing the telcos to pay their debts over a number of years. However, Dhotre said on Wednesday that “no such proposal is under consideration by the government”.

 

Nonetheless, reduced payments could mean salvation for Vodafone Idea, whose position is much more precarious than Airtel’s. Shares in the two companies went up as the news began to circulate, with Idea’s climbing 38%, while Airtel’s were held to a more modest 4%. 

 

While its fair to say that both companies are far from out of the woods, a shift to a more benevolent attitude on the part of the government would certainly be a step in the right direction. The Indian telecoms market needs to be carefully nurtured right now to avoid a lengthy legal battle over these fees that could leave all parties tied up for many years.