Voda Idea AGR dues could rise further

KOLKATA: Vodafone Idea’s estimated AGR-related dues of Rs 44,200 crore could rise sharply, entailing additional provisioning and stretching its balance sheet further, if the methodology adopted by the telecom department to compute such liabilities is different, said analysts.

ICICI Securities said Vodafone Idea had indicated during an analyst call on Friday that it had “estimated its adjusted gross revenue (AGR) liability at Rs 44,200 crore (including penalty and interest) through differential interest rates of 18% and 12.5% (both compounded annually), and (that) if it’s done any other way, the AGR liability would increase significantly”.

Voda Idea, the brokerage said, also indicated its “estimated AGR principal (component) of Rs 11,100 crore is based on demand notice(s)” received (from the Department of Telecommunications), and “the last 2-3 years workings are the company’s own estimates”.

The one-year old telco — born out of the merger of Vodafone India and Idea Cellular — posted a massive Rs 50,921.9 crore loss in the July-September quarter, and has internally pegged its additional AGR liability at Rs 44,200 crore towards licence fees, spectrum usage charge (SUC), interest and penalties that need to be paid in under three months.

This is after the October 24 Supreme Court ruling on adjusted gross revenue (AGR) kicked in.

Credit Suisse said if the telco’s total AGR dues work out higher at “Rs 54,200 crore as per DoT’s internal estimates basis a report, the company would have to make additional provisions of Rs 10,100 crore”.

Analysts said Vodafone Idea’s significant AGR liability adds to its uncertain future, and may require the company to go for another huge equity infusion to survive if substantial relief isn’t forthcoming from the government.

This is since the telco can access only Rs 8,370 crore from co-parent Vodafone Group towards settlement of crystallised pre-merger contingent liabilities, and would accordingly, have to fully shoulder the balance Rs 35,830 crore of its AGR dues.

This though is easier said than done, said analysts, since UK’s Vodafone Group has ruled out further equity infusion into Voda Idea, while the Aditya Birla Group too is reportedly averse to any such infusion in its telecom joint venture, and may let it go insolvent if the government doesn’t help.

Voda Idea has said its ability to continue as a ‘going concern’ hinges on getting relief — including a waiver on the interest, penalties on the AGR-related dues, lower taxes and levies, and a moratorium on spectrum payments — from the government.

Ravinder Takkar, the company’s managing director, has said providing relief is very much in the government’s hands as it has won the AGR case, and can act in the interest of the telecom sector, the economy and consumers.