Airtel, Voda-Idea to pay Rs 7881 crore a year if AGR is staggered

Bharti Airtel has already paid Rs 18,000 crore of its AGR dues

Under a payment scheme staggered over 20 years, Bharti Airtel and Vodafone Idea together have to pay around Rs 7,881 crore annually (the latter around Rs 5,235 crore) towards their AGR dues.

Analysts say the figure comes from the Department of Telecommunication’s proposal for a staggered payment scheme with an interest rate of 8 per cent per annum.

The reasonable outflow is despite the fact that the total AGR dues calculation is based on the demand made by the DoT which is far higher than the submissions of the telecom companies.

It is also based on the balance payment of AGR dues which they have to make after adjusting their recent payouts, made on the basis of their calculation of the AGR dues they owe the government. 

Bharti Airtel, for instance, has already paid Rs 18,000 crore of its AGR dues.

The 8 per cent interest tag is far lower than the average applicable interest rate of around 13.9 per cent as specified in the licence conditions rate from April 2003 to April 2019. It has been pegged to the State Bank of India’s banks’ Prime Lending Rate and later on to the Marginal Cost of Fund Based Lending Rate and ranges from as high as 16.75 per cent to as low as 11.80 per cent.  

As a result of the lower interest rate for the instalments, the savings for the two players alone will be to the tune of over Rs 3,800 crore annually. Their total saving on interest for the entire period of 20 years is estimated to be over Rs 76,000 crore.

However, the calculation is based on the average interest rate of 13.9 per cent; if it was compared to April 2019 (12. 20 per cent), it would surely come down.

Yet the fact remains that the amount that the two telcos have to pay annually as  AGR dues is less than half the Rs 18,024 crore they pay every year for deferred spectrum payments. And thanks to the two-year moratorium offered by the government recently, this will go up to Rs 23,918 crore a year, three times more than what they will have to pay every year for the AGR dues.

Yet, seen from another perspective, the burden is still substantial. 

For instance, based on industry data, Vodafone-Idea pays around Rs  4,440 crore per annum as licence fee and Spectrum Usage Charge (SUC). The over Rs 5,235 crore it has to fork out for AGR dues will be over and above this amount, making the total it pays out nearly Rs 10,000 crore per annum. Moreover, with revenues increasing, both the licence fee and SUC will only increase.  

At the industry level, if all telcos (even those which have shut shop or are in the National Company Law Tribunal) had to pay their AGR dues, the government will receive over Rs 14, 250 crore annually for 20 years.

This figure is much lower than the Rs 21,000 crore the government would receive if the interest rate on the instalments was pegged at 13.9 per cent. But practically speaking, it will be able to get AGR dues mainly only from companies which are still in operation and this comes to Rs 9,183 crore annually.