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SC's AGR order to push telcos to raise tariffs: Acuite Ratings
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SME Times News Bureau | 14 Feb, 2020
The Supreme Court order on
Friday directing telecom companies to settle their AGR dues by March 16
will create uncertainty on their operational sustainability, especially
on Vodafone Idea, which will push them to raise tariffs by 20-25% to
remain afloat, Acuite Ratings & Research Limited has said.
"The
SC order directing the telecom companies to settle the pending AGR dues
by March 17 puts further uncertainty on their operational
sustainability, particularly that of Vodafone Idea. The latter's ability
to pay an amount of over Rs 55,000 Cr by the stipulated date is
uncertain given its current financial flexibility," said Suman
Chowdhury, President, Acuite Ratings.
Airtel needs to pay an
amount of Rs, 35,500 crore while it has been able to raise funds in the
recent past. "Acuite expects telecom tariffs to rise further by at least
20%-25% in the near to medium term to support the payments of such
large dues to DoT," said Chowdhury.
The telcos have already effected one round of tariff hike in December.
The
Supreme Court on Friday blasted telcos for not paying AGR dues and
demanded that they pay "sizeable" dues by Friday. Vodafone-Idea, Airtel
and other telcos owe Rs 1.47 lakh crore to the Department of Telecom.
This
is a big blow to the telcos, especially Vodafone Idea whose stocks
slumped by 15% on the BSE. The court on Friday demanded that the telecom
department withdraw its executive order overriding the court order to
recover the dues.
The latest directions may force Vodafone Idea
and Bharti Airtel to part-pay their respective dues of over Rs 53,000
crore and Rs 35,500 crore immediately.
Vodafone Idea had said
its survival is in question if there is no relief from the Supreme
Court. Vodafone Idea on Thursday reported widening of losses to Rs
6,438.8 crore in October-December 2019 against Rs 5,004.6 crore in the
year-ago period as the AGR (adjusted gross revenue) dues-hit telco
reeled under the impact of increased finance costs and higher
depreciation of assets.
Among the telcos, Bharti Airtel is best
positioned at present to meet obligations after raising $3 billion
through a combination of qualified institutional equity placement (QIP)
and convertible bond offerings.
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