On 1 September, the Supreme Court (CS) nevertheless delivered a verdict in the AGR case, authorizing the gradual payment of the dues over the next 10 years. Harti Airtel shares won by 5%, but Vodafone Idea fell 15% intraday after verdict.
Experts say it’s smart for telecom companies, even though the 10-year era is less than the age of 15-20.They say the verdict may simply be a picture in favor of Reliance Jio and Bharti Airtel, but it may only be a matter of survival for Vodafone Idea.
“The SC’s verdict giving a 10-year era for the payment of AGR contributions with a down payment of 10% can be considered fair enough.Since the SC has said nothing about reliance Communications, Aircel and Videocon quotas, this is in fact very positive for Reliance Jio and Bharti Airtel.However, the 10-year suspension puts a question mark on Vodafone’s survival,” Vijaya Kumar, a leading investment stratee at Geojit Financial Services, told Moneycontrol VK.
Reliance Industries, which owns Jio, climbed more than 1% to Rs 2,105.75 and Reliance Communications rose 5% at the time of publication of this copy.
Kumar believes that India’s telecommunications industry is moving towards a virtual duopoly, which is desirable.
For the stock market, the verdict is mixed, he said.Since it’s positive for Bharti and RIL, those two heavyweight values deserve the market.
The unrest for Vodafone will not only collect its shares, but will also have an effect on the shares of the banks that have lent to Vodafone, Vijaya Kumar said.
Jaikishan Parmar, senior equity analyst at Angel Broking, also believes that some banks may face some short-term tension that would be exposed to Vodafone Idea, as staggered payment is allowed for 10 years instead of the 15/20 years required through the company/government.”And the investor will wait and see the mode, as SC will also give a hearing on the interest charged on the interest component of the moratorium.”
In its ruling, the Supreme Court stated that it had allowed telecommunications companies to pay tiered adjusted Gross Income (AGR) contributions over the next 10 years The 10-year payment era will begin on April 1, 2021.
Telecommunications will agree to pay AGR fees in accordance with the Supreme Court order and pay 10 cents in advance.
The AGR’s failure to pay would mean interest, consequences and contempt of court, the Supreme Court ruled.
On the occasion of a spectrum sale, the court agreed that the consultation of whether the sale of spectrum may be legal under the Insolvency and Bankruptcy Code (IBC) deserves to be through the National Court of Company Law, CNBC-TV18 reports.
According to Bharti’s lawyer, the option of review and curative request should be with telecommunications operators for two things: the inclusion of spectrum user fees (SUCs), as the case is only similar to licensing fees and payment terms.Reduce responsibility by about a third, said Hemang Jani, a leading strata in stock, brokerage and distribution at Motilal Oswal Financial Services.
He also believes that the verdict is positive for Bharti Airtel and Reliance Industries, because the responsibility of Aircel (Rs 14000 crore) and Videocon (Rs 1300 crore) will fall on Bharti, and Communication Reliances (Rs 31000 crore) will fall to Reliance Jio.who have acquired their spectrum.
“Assuming an interest rate of 8%, Bharti and Vodafone Idea will now have to pay 3,900 crore Rs and 7,500 crore Rs respectively.With an interest rate of 0, this comes down to Rs 2,600 crore / Rs 5,000 crore respectively,” Jani said.
He expects Bharti to be able to manage the loose money payment (FCF) of more than Rs 10,000 crore in fiscal year 2020 without a rate increase, while Vodafone Idea with an EBITDA of Rs 6000 crore and an annual payment deserves to have problems of management.
Abhimanyu Sofat, Director of Research at IIFL Securities, said: “The trial is a relief for Bharti Airtel, as they will have to pay the old fees of the corporations to which they bought spectrum.The window for vodafone to raise funds, has a greater commitment of style and a low ROI, which adds tension to the actions.”
Disclaimer: The investment expert’s recommendations and investment reviews at Moneycontrol.com are his and not those of or his management. Moneycontrol.com advises users to consult with qualified experts before making any investment decisions.
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