In a heavy blow to the Telcos, the Supreme Court of India ruled in favour of the government on the AGR (adjusted gross revenue) issue, with serious implications for the sector, with the stocks of the telcos falling sharply.
A bench led by Justice Arun Mishra, A.A. Nazeer, and M.R Shah, gave the ruling. The government and the telecom sector were locked in a fight over the definition of AGR. Shares of Vodafone Idea and Bharti Airtel fell sharply after the announcement of the order. At the close of trade on BSE, Vodafone Idea had plunged 23.4% to INR 4.33, touching a 52-week low of INR 4.10. Bharti Airtel shares fell nearly 10% soon after the news but had recovered to end 3.3% higher at INR 372.45. Bharti Airtel said that it was unhappy
with the verdict and that the decision will weaken the viability of the sector as a whole.
Industry body COAI said the Supreme Court ruling will deal a “disastrous blow” to the industry, given its precarious financial condition. Cellular Operators' Association of India (COAI) Director General Rajan Mathews said that the question that arises is whether this is the financial straw that finally breaks the back of operators. Prashant Singhal, Emerging Markets, Technology, Media and Telecom Leader, said that the Telecom sector is under immense financial stress as admitted by all stakeholders. Further demand of INR 92,000 crore will dampen the sentiment of telecom operators and raising funds for broadband, network expansion, and Digital India will hit a significant roadblock. He further added that the impact of this will not remain confined to the telecom sector but will have a domino effect on the larger digital value chain; this necessitates the intervention of all the stakeholders to get the sector back in shape.
The telecom sector had claimed that through the unified operators association that the AGR only includes license and spectrum fees. The TDSAT has excluded bad debt, forex fluctuations and sale of scrap from it. Both sides had challenged the order. Telcos have to pay around 3 of AGR as spectrum charges and another 8 percent as license fees. Most operators have either exited the sector post the 2G ruling or are not doing well. The entry of Reliance Jio into the sector has only made things worse for the old players such as Airtel and Vodafone.
Magazine
.jpg "Telcos Suffer a Massive Setback, SC asks to pay INR 92,000 crore to Government")
.jpg "Redefining Consulting Services That Facilitates & Drives Agri Innovation")
.jpg "Startups In Fabrication Realm")
