The Supreme Court's order on the definition of Adjusted Gross Revenue (AGR) is likely to put further stress on the balance sheets of the telecom companies, which are already under pressure, said Jefferies in its latest report, adding that for Vodafone-Idea, the payment, as demanded by the telecom department, will use up all existing and operating cash flows (excluding interest) over the next three years.
In a massive setback for Bharti Airtel, Vodafone-Idea and Reliance Communications, the Supreme Court on Thursday rejected the telecom companies' definition of Adjusted Gross Revenue (AGR).
The government and the telecom companies were locked in a legal battle in the 14-year-old case over the definition of AGR, on the basis of which the telecom department calculates levies payable by companies.
With the judgement, the SC has exposed the incumbent telcos to potential demands by DOT of up to Rs 1.33 lakh crore.
The court has held that all revenues, except for termination fee and roaming charges, will be a part of the AGR. Telcos had argued that non-telecom, non-core revenues should not be a part of the AGR.
According to Jefferies, Voda-Idea will find it difficult to raise the money and will even struggle to continue its operations. "Even with a moratorium on spectrum dues, it will not have funding for capex," it said.
Bharti Airtel too will feel the pressure if asked for immediate payment, said the financial services company. "Bharti is better positioned, but full payment will require it to curtail capex."
However, the company said that it awaits more clarity on the amount and terms of payment from the government.
First Published: IST