In a historic verdict, The apex court has given telecom firms 10 years to clear AGR dues. It has directed telcos to pay 10 per cent of the total AGR dues by March 31, 2021. The seems a big blow to Vodafone Idea, whose shares tanked 20% after the verdict was pronounced.
The supreme court, also ordered the bankruptcy court to decide on whether airwaves can be subject to insolvency proceedings . This issue came to the forefront when the Department of Telecommunications (DoT) highlighted that bankrupt telcos have not paid AGR dues of Rs 40,000 crore were crore.
A three-judge bench led by Justice Arun Mishra, comprising Justices S Abdul Nazeer and MR Shah has asked all telcos to clear their AGR dues upwards of Rrs 1.6 lakh crore within the next 10 years. Telcos though need to pay 10% of their upfront by March 31,2021. They have to pay the instalments by February 7 every year to meet March 31 deadlines annually, till 2031.
Further, it asked that managing directors and chairpersons of the concerned telecom firms to mandatorily give an affidavit undertaking to pay the amount. While announcing the verdict, the SC bench said any default will not only accrue interest but will also invite contempt of court proceedings.
Shares of cash strapped Vodafone Idea tanked by 14.92% on the BSE within minutes of the judgement to trade at Rs 8.67 a piece. Shares of Airtel, with a stronger balance sheet, however jumped nearly 6%.
Every year by 7 Feb, payment to be made and telecom companies will have to face contempt proceedings and also have to pay penalty in case of default in payment of annual installment,” observed the bench.
The two most-affected telecom firms, Vodafone Idea with over Rs 50,400 crore dues and Bharti Airtel with over Rs 26,000 crore dues, had sought 15 years. It may be noted that Vodafone Idea had made it clear that it would be left with no option but to shut operations if it was forced to pay AGR dues in one go.