According to a recent report by BofA Securities, despite Vodafone Idea Limited (VIL) providing the guarantee as asked by the Supreme Court, the Indian telecom market could still gravitate towards a two-player dominant market with Bharti Airtel and Reliance Jio.

BofA views the Supreme Court’s verdict as negative for VIL as the company said in court that it doesn’t have money to give bank guarantees.

Further, BofA awaits VIL promoters (Vodafone PLC and the Aditya Birla Group) move to provide guarantees. The report added that the current stance of VIL’s promoters is no incremental investment in the near-term. In this scenario, even if they give guarantee, potentially the telecom market could still gravitate towards a dominant two player market with both Bharti Airtel and Jio. This is because, VIL may struggle in the medium term to invest in their networks give a sizeable amount of cash may go towards paying the adjusted gross revenue (AGR) fine/penalty, BofA said.

Further, the report added that a key debate which telcos could face is around personal guarantees by directors. This is because if the telcos get an extension of 10-year payment then the directors would remain liable for a longer period, even if they were no longer directors at the company.

Post the June 18, 2020 verdict, the bank sees no further legal options for telcos. In theory an ordinance could be passed in parliament, but BofA considers that as a low possibility event as it would be politically difficult.

On Bharti, the report said the company is better placed to give guarantee given its stronger balance sheet.