ICICI Direct: AGR Verdict - Vodafone Survival Still An Uphill Task

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..ICICI Direct Report.The Supreme Court verdict on adjusted gross revenue (AGR) dues, allowing 10 years staggered payment and clarifying on spectrum trading/sharing liabilities, possibly marks the end of a long-drawn legal tangle.For the sector, as a whole, the issues now shift to tariff hike, which will be the key determinant to the path of improvement in cash flow generation, return ratio and survival in case of Vodafone Idea Ltd.For Bharti Airtel Ltd. (assuming it also has to pay Videocon Industries Ltd.’s dues), annuity payment of Rs 4,638 crore from FY22 end onwards, will not be a major issue.However, Vodafone Idea which has already been plagued by cash burns will find it difficult to meet the demand of annuity payment of Rs 8,391 crore from FY22 end onwards.Apart from tariff hike (to the tune of approximately 92%), it would also need immediate capital infusion to bridge the cash gap.The judgement requires 10% of ‘total dues’ to be paid before March 31, 2021 and remaining in 10 equal instalments.We assume that since both Vodafone Idea and Bharti Airtel have already paid more than 10% of dues, payout should begin from FY22 end..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

ICICI Direct: AGR Verdict - Vodafone Survival Still An Uphill Task

A tariff hike and capital infusion will be key to the survival of Vodafone Idea while Bharti Airtel remains relatively stable.

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