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Motilal Oswal Report
The long-drawn adjusted gross revenue (AGR) liability court battle seems to have reached some conclusion as the Supreme Court gave its verdict on timelines.
It allowed for a 10-year repayment period for the AGR liability (at 8% marginal cost of funds-based lending rate), with 10% of total dues to be paid upfront on March 31, 2020 and the rest in annual payments from March 2022.
Positively, for Bharti Airtel Ltd. /RJio, the AGR liability of partly acquired/shared spectrum of Aircel Ltd. (Rs 124 billion) / Reliance Communications Ltd. (Rs 252 billion) is to be decided by the National Company Law Tribunal and therefore restricts the liability.
However, the fully acquired spectrum of Videocon Industries Ltd. (Rs 14 billion) would fall on Airtel.
As per Bharti Airtel’s counsel, the option of review and curative petitions is available with the telcos for two purposes:
a) the elimination of spectrum usage charge (SUC) -related AGR liability (reducing the amount by approximately 40%) – as the case was only related to license fee and b) payment timelines.
We see limited grounds for this.
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