Vodafone Idea Ltd. fate is based on to today’s Supreme Court decision on the issue of tenure of payment of Adjusted Gross Revenue (AGR) dues.
In the last hearing in July, the court had clearly told Vodafone and other operators that there would be no reassessment of the AGR dues calculated by the Department of Telecommunications (DoT).
Vodafone Idea Ltd., had earlier sought a 20-year period, but changed to 15 years in the last court hearing.
Its AGR dues is Rs 58,200 crore (the highest among all telecom companies). Of that, VIL has so far managed to pay only Rs 7,900 crore. By comparison, Bharti Airtel, whose total dues are to the tune of Rs 44,000 crore, has only Rs 26,200 crore still left to be paid.
It will need to pay Rs 7,500 crore annually (at 8% p.a interest) for AGR dues. It will also have to shell out Rs 14,000 crore as deferred spectrum payments every year from 2022-23 (the government has given it a two-year moratorium). Additionally it has to put Rs 6,500 crore as capex to stay competitive.
Goldman Sachs estimates that VIL’s ARPU needs to go up by 87% from the current level (Rs 124 in the June quarter) and its earnings before interest, tax (EBITDA) must increase to 4.9 times that in the June quarter.
