Indian telcos set to miss AGR payment deadline

Published: 23 January 2020 - 8:14 a.m.

India’s second and third biggest telcos, Vodafone Idea and Bharti Airtel, look set to miss the 24th of January deadline for making payment of their outstanding adjusted gross revenues (AGR) dues, according to reports in the press.

India’s Deccan Herald claims that the pair will miss Friday’s deadline to deposit a total of around $2 billion (1.47 lakh crore rupees) with the Department of Telecoms.

Sources familiar with the matter told the Herald that, while the two telcos would comply with the payment request for outstanding dues, they would delay payment until after their petitions were heard in court next week.

It is not clear whether this decision will incur further penalties for the pair.

The ruling has weighed heavily on the fate of Vodafone Idea, which is teetering on the brink of insolvency, having seen its share price plummet since the initial Supreme Court ruling last year.

Late last year, India’s Supreme Court ruled that the country’s telcos must recalculate their adjusted gross revenues, to include revenues from handset sales and added on services. As a result of the recalculation, billions of dollars of payments became due to India’s Department of Telecoms, who uses the AGR as a metric to calculate fees for spectrum licences and usage charges.

The ruling came at a particularly inopportune moment for India’s telcos, who are struggling to balance the duelling demands of sky high capital investment demands for 5G and wafer thin profit margins. Average revenue per user (ARPU) in India is currently hovering around the $1.50 mark for all operators, following a protracted price war that saw operators drop their prices in response to Reliance Jio’s aggressive pricing strategy.

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