According to ICRA, the rejection of telcos’ pleas seeking recalculation of adjusted gross revenue (AGR) related dues, does not bode well for recovery in the telecom sector.
ICRA expects that the recent AGR ruling is likely to delay the sector’s recovery given the backdrop of high debt levels and low tariffs.
Further, ICRA added that to meet high commitment towards debt repayments and the Department of Telecommunications’ (DoT) payment obligations, the industry participants will need to explore avenues of fundraising or asset monetisation, besides concentrating on improving the ARPU levels substantially.
Commenting on the development, Sabyasachi Majumdar, senior vice president and group head, ICRA Limited, said, “The Supreme court has quashed the AGR penalty re-computation request of the telcos, stating that the earlier order clearly states that no-assessment can be done. This will not bode well for the recovery in the sector and is likely to protract the same, given the elevated debt levels and very low tariffs. The industry is staring at high commitments towards debt repayments and DoT payments in the coming few quarters, with next major payments due in March-April 2022. In order to meet these, the industry participants will have to look for avenues of fundraising and/or asset monetisation, in addition to focus on substantially improving the ARPU levels.”
