As per Axis Capital, the government’s budgetary estimates of Rs 1.33 trillion in receipts from the telecom sector in the financial year (FY) 2021 could be a major relief for Vodafone Idea and Bharti Airtel, as the estimates do not include penalty, interest and interest on penalty in its calculation.
Of the Rs 590 billion expected by the government in FY20, assuming Rs 210 billion in licence fee/ spectrum usage charges (SUC) and Rs 210 billion from spectrum-related payment, the AGR liability collection works out to Rs 170 billion (Vodafone-Idea’s Rs 100 billion, Bharti Airtel’s Rs 87 billion), the principal portion only, Axis Capital estimated.
Further, Axis sees the budget estimates to be positive for Vodafone-Idea, as it improves the business case for the company to remain a going concern.
Supreme Court will soon be hearing the modification petition filed by telcos. As per Axis capital, the matter might be transferred to the Department of Telecommunications (DoT), which in turn will grant relief to incumbents.
As per Axis Capital estimates, the government expects Rs 1.33 trillion in receipts in FY21. Assuming a two-year moratorium (FY21/FY22) on spectrum-related payments and 30 per cent increase in licence/SUC related payments, the government expects Rs 1.05 trillion from the spectrum auction including 5G-related spectrum.
Further, the brokerage firm stated that the government may forego penalty, interest and interest on penalty related to the AGR dues, providing relief to the telcos. It added that the relief on AGR related dues is expected as the government has proposed ‘Vivad Se Vishwas’ scheme, under which a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by March 31, 2020. Those who avail this scheme after the date will have to pay some additional amount. The scheme will remain open till June 30, 2020.