Bharti Airtel, Vodafone Idea must pay 10% of AGR dues by March 31: DoT

 Bharti Airtel and Vodafone Idea are busy dialing their legal teams to interpret what the Supreme Court meant when it said 10 per cent of their adjusted gross revenue (AGR) dues must be paid by March 31, 2021, even as the Department of Telecommunications (DoT) believes there's no ambiguity in the order.

While these telcos maintain they have already paid more than the 10 per cent of their AGR dues, the DoT view — that the companies will have to pay 10 per cent of the total dues by March 31, 2021, irrespective of what one has already paid — has turned the industry calculation topsy turvy. The telcos would decide their future course of action depending on the legal advice they get as senior counsels study the fine print of the verdict.

On September 1, the court had asked the companies to make 10 per cent of the upfront payment of their dues before March 31, 2021 to the DoT, with the remaining to be paid over 10 years starting April 1, 2021.

On Monday, a Press Trust of India report quoted an unnamed DoT official to say that telecom operators, including Bharti Airtel and Vodafone Idea, which have pending AGR dues, will have to pay 10 per cent of the total liability by March 31, 2021, irrespective of the part-payments made by them. DoT too has been consulting lawyers to understand what the court verdict on the 10 per cent upfront payment may mean.

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While the two companies are busy doing their maths, experts feel that since the telcos have made payments over and above the 10 per cent of the total dues, they should be allowed to start the payment cycle from the next fiscal (April 2021-March 2022). If they are spared the 10 per cent payment by March 31, 2021, the telcos would get an additional year to kick off their 10-year instalments.

Bharti Airtel, Vodafone Idea must pay 10% of AGR dues by March 31: DoT

According to DoT, operational telecom operators are expected to pay Rs 12,921 crore by March 31, of which close to 80 per cent has to be paid by Vodafone Idea and Bharti Airtel.

The DoT official told PTI that the Supreme Court order is very clear that telecom operators have to make 10 per cent payment of the total dues as demanded by DoT by March 31, 2021. “DoT has already raised demand for full AGR dues. The 10 per cent payment to be made by this March will be calculated on total AGR liability,” the official said.

Based on this calculation, Vodafone Idea will have to pay around Rs 5,825 crore and Bharti Airtel Rs 4,398 crore by March 31, 2021, against the total demand of Rs 58,254 crore and Rs 43,980 crore, respectively. This is despite Vodafone Idea having already paid Rs 7,854 crore and Bharti Airtel Rs 18,004 crore out of their total dues.

There’s no AGR due pending against Reliance Jio.

Earlier this month, Vodafone Idea CEO Ravinder Takkar had said at a virtual press meet that the SC order allowing 10 years to telcos for clearing the AGR dues was a positive outcome. He had pointed out that the telco had already paid more than 10 per cent of the AGR dues as ordered by the court, giving it time till March 2022 to pay its first instalment.

The SC had last year upheld the DoT definition of AGR, ordering telcos to clear their dues which were estimated at Rs 1.47 trillion. It’s another matter that some of the telcos, which are part of the order, have either shut down, sold their operations or are going through liquidation.

Carlyle Group to acquire 25% stake in Airtel's Data Centre business

The Carlyle Group on Wednesday announced that it will invest $235 million for approximately 25 per cent stake in Nxtra Data Ltd, a wholly-owned subsidiary of Bharti Airtel engaged in the data centre business.
The post-money enterprise valuation of Nxtra is approximately $1.2 billion and Carlyle will hold a stake of approximately 25% in the business upon completion of the transaction, with Airtel continuing to hold the remaining stake of approximately 75%, Bharti Airtel said in a statement.
The transaction is subject to the necessary regulatory approvals, including approval from the Competition Commission of India.
Headquartered in New Delhi, Nxtra offers secure data centre services to leading Indian and global enterprises, hyperscalers, start-ups, SMEs and governments. Nxtra’s nation-wide portfolio of 10 large data centres and more than 120 edge data centres provides customers with co-location services, cloud infrastructure, managed hosting, data backup, disaster recovery, and remote infrastructure management.

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"Rapid digitisation has opened up a massive growth opportunity for data centres in India and we plan to accelerate our investments to become a major player in this segment. We are delighted to have Carlyle as a strategic partner in this exciting journey, particularly given their experience in this industry, and look forward to working with them," said Gopal Vittal, MD & CEO (India and South Asia), Bharti Airtel.
Neeraj Bharadwaj, Managing Director of the Carlyle Asia Partners advisory team, said, “India is set to become one of the largest markets in the world for digital services. Airtel, with its proven track record of solid execution and customer focus, is well positioned to leverage the potential growth of data centres in India. We look forward to collaborating with Airtel to unlock the full potential of Nxtra.”

US-based Carlyle has prior experience in data centre ownership through investments in Coresite in the US and Itconic in Spain.
Nxtra, which is building multiple large data centres across India, will use the proceeds from the deal to scale up its infrastructure, the companies said.
India is seeing a surge in demand for data centres as more businesses choose cloud computing, and consumer demand for digital services such as smartphone entertainment continues to grow, they added.
Cloud and entertainment services represent the next revenue frontier for traditional telecom carriers like Airtel, as voice and data rates in India remain among the cheapest in the world.
Airtel's local rival Jio, controlled by billionaire Mukesh Ambani, has a cloud tie-up with Microsoft, under which it will build data centers hosted on Microsoft's Azure cloud.

Bharti Airtel pitches for healthy telecom sector, Vodafone Idea's survival

Bharti Airtelon Wednesday pitched for a healthy telecom sector with three players, and said Vodafone Idea’s survival will be good from the ‘investment and reputation’ point of view for India.
In the company’s post-earnings conference call, Bharti Airtel’s Chief Financial Officer (CFO) Badal Bagri said the telecom sector was large enough to accommodate three players. “On Vodafone, I think my view is that they will remain and I wish that they thrive. India needs a three-player market and it’s a large-enough market place to absorb three players. I think it will be good from all perspectives — investment, jobs and reputation that Vodafone survives and thrives and I have no doubt that they will do so,” he said.

Airtel also said it would not buy the 5G spectrum in the upcoming auctions as the price is “too high.”
According to the price recommended by the Telecom Regulatory Authority of India (Trai), the cost of 100 megahertz of 5G spectrum would be close to Rs 50,000 crore. “We believe the price is too high. So, we will not pick it up at those prices,” Bharti Airtel’s Chief Executive Officer (CEO) Gopal Vittal said in a post-earnings call with investors on Wednesday.
In December 2019, the Digital Communications Commission (DCC), the apex decision-making body in telecom, gave its nod to spectrum auction plans, entailing 8,300 MHz of airwaves pan-Indian at a reserve price that adds up to Rs 5,22,850 crore. Meanwhile, Airtel said it would shut down its 3G network in 11 circles across the country. “We have completed 3G shutdowns in 11 circles and reformed spectrum to 4G,” said Vittal. The company said capex would be utilised towards re-farming the 3G spectrum for 4G services as the consumption of the latter has increased.
Bharti Airtel on Tuesday posted a net loss of Rs 1,035 crore for the quarter ended December 31, 2019 (Q3), as it provisioned for the interest accrued on account of adjusted gross revenue (AGR) payment. This is the company’s third consecutive quarterly loss; it had recorded a profit of Rs 86 crore in the year-ago quarter. On the operational front, the company posted an improvement in average revenue per user (ARPU) from Rs 128 to Rs 135, sequentially.
Mobile revenues have witnessed year-on-year (YoY) growth of 9.6 per cent on the back of focus on quality customers, up-trading and the recent tariff actions in some parts. Liabilities and provisions as of September 30, 2019, aggregated to Rs 34,260 crore (comprising principal of Rs 8,747 crore, interest of Rs 15,446 crore, penalty of Rs 3,760 crore, and interest on penalty of Rs 6,307 crore).
On October 24, 2019, the Supreme Court delivered a judgment upholding the view of the Department of Telecom (DoT) in respect to the definition of AGR. The apex court has allowed three months to the affected parties to pay the amount due to the DoT.
A review petition in this regard, too, was rejected in January. Thereafter, the telecom operators have filed an application for modification of the supplementary order before the Supreme Court, which is pending disposal. As on December 31, Airtel had 419 million customers, an increase of 3.7 per cent from 403.7 million in the corresponding quarter in the last financial year.

Telecom dues: Curative petitions rarely admitted by SC, say analysts

With just one week left for them to pay over Rs 88,600 crore in past dues, Bharti Airteland Vodafone Idea are left with last legal remedy of filing a curative petition but such petitions are rarely admitted by the Supreme Court, analysts said on Friday.

The Supreme Court on Thursday dismissed review petitions filed by telecom companies against its October 24, 2019 order that asked for inclusion of non-telecom revenues for calculating statutory dues such as license fee and spectrum usage charge.


Dues, which total to Rs 1.47 trillion for 15 telecom companies including Airtel and Vodafone Idea Ltd (VIL), as per the October order, have to be paid by January 23.

This January 23 deadline for payment may not apply to non-telecom companies which too have been asked to pay substantial amounts in past dues, Kotak Institutional Equities said in a note.

"From a legal standpoint, the only option available to the telcos now is a curative petition," it said.

The rules around curative petition are fairly tight as the petitioner has to establish that there was a genuine violation of principles of natural justice, it said adding the court can impose 'exemplary' costs to the petitioner if the plea lacks merit. "We note that curative petitions are rarely admitted." ICICI Securities said Bharti Airtel has already raised capital of $3 billion, which should help it meet the burden. "But the same remains a herculean challenge for VIL – a challenge that cannot be resolved without government intervention, in our view." Though Bharti Airtel and VIL can still file a curative petition, "the probability of resolution remains bleak," it said.

UBS Group said the ruling raises risks for lenders to the companies. "IndusInd, Yes Bank and SBI appears to have relatively high exposure to Vodafone Idea," it said.

Airtel $3-billion QIP plan: Issue price at a discount over floor price

Bharti Airtel has announced allotment of 32.35 crore equity shares to eligible institutional buyers at an issue price of Rs 445 per share as part of $2 billion (over Rs 14,000 crore) qualified institutional placement that closed on Tuesday.
The issue price was at a discount of 1.57 per cent to the stated floor price of Rs 452.09 per equity share. The company had embarked on a mega fund raising exercise, the proceeds of which will be used to pay the adjusted gross revenue (AGR) liability and invest in the network.

Bharti Airtel has to pay nearly Rs 35,586 crore in additional statutory dues, after a Supreme Court ruling on AGR liabilities of telecom companies in October last year.
Earlier this month, shareholders of Bharti Airtel had approved proposals to raise up to $2 billion (over Rs 14,000 crore) in equity and another $1 billion (around Rs 7,000 crore) in debt.
Airtel has announced the closure of the issue period for the qualified institutional placement (QIP) and fixed the issue price at "Rs 445 per equity share which is at a discount of 1.57 per cent to the floor price of Rs 452.09 per equity share".
As many as 32.35 crore equity shares are being allotted to eligible qualified institutional buyers, the company said in a regulatory filing. The special committee of directors for fund raising exercise also cleared the terms of foreign currency convertible bonds (FCCBs) including the issue price.
"FCCBs due 2025, convertible into fully paid-up equity shares of face value of Rs 5 each of the company at a price of Rs 534 per conversion equity share to the initial purchasers subject to receipt of funds, satisfaction of other conditions precedent and settlement as per applicable laws and procedures and relevant agreements," the filing said.

Bharti Airtel board okays raising $4 bn via equity dilution, debt funding

Telecom operator Bharti Airtel's board on Wednesday approved raising $4 billion through equity dilution and debt funding.
The board for now has given its go-ahead to raise up to $3 billion and has also approved raising an additional $1 billion, an official said.

The board has given its approval to raise $2 billion through "one or more qualified institutional placement, public and/or private offerings of equity shares, compulsory convertible debentures/other convertible securities/warrants/ADR/GDR or a combination thereof", according to a regulatory filing.
The company has received an approval to raise $1 billion through foreign debt instrument and another $1 billion through issuance of "unsecured and/or secured, listed and/or unlisted, redeemable non-convertible debentures along with warrants or other similar security denominated in Indian National Rupee or combination thereof in one or more tranches", the filing said.
Apart from $2 billion, the overall issuance for now shall be up to $1 billion, thereby totalling to $3 billion, it added.

Airtel, Voda Idea and Jio to hike mobile, data tariffs by up to 40%

Bharti Airteland Vodafone Idea on Sunday announced a tariff hike in the range of 15 per cent and 40 per cent across different plans. The tariff hike by both companies will be applicable from December 3, 2019.
Vodafone Idea on Sunday said its new plans for its prepaid products and services will be available across India, starting 00:00 hours of December 3, 2019.

Airtel’s new plans represent tariff increases in the range of a mere 50 paise per day to Rs 2.85 per day and offer generous data and calling benefits.
“Our new mobile plans offer tremendous value to our customers and are backed by a superior network experience on Airtel’s nationwide 4G network,” Shashwat Sharma, chief marketing officer, Bharti Airtel, said in the statement.
Reliance Jio also said it will be introducing new plans with unlimited voice and data.
These plans will have a fair usage policy for calls to other mobile networks. The new plans will be effective from December 6, 2019.
“Although, the new all-in-one plans will be priced up to 40 per cent higher, staying true to its promise of being customer-first, Reliance Jio customers will get up to 300 per cent more benefits,” Reliance Jio said in a release.
The announcement has come against the backdrop of both companies reporting massive losses in the second quarter (Q2) amid an adverse Supreme Court (SC) ruling on adjusted gross revenue (AGR).
Bharti Airtel reported a pre-tax loss of Rs 31,334 crore for the quarter ended July-September (Q2) after the company provided for outstanding payments to the central government on account of SC judgment on AGR. The pre-tax loss in the year-ago quarter stood at Rs 1,998 crore.
Vodafone Idea reported a massive pre-tax loss of Rs 36,959 crore in Q2 after it provided for payments related to AGR. The company took a hit of Rs 30,774 crore (including AGR) for the quarter. This led to a loss of Rs 50,922 crore at the net level — the highest-ever for an Indian company. The company had posted a loss of Rs 4,974 crore in the year-ago quarter, while the loss in the April-June quarter was Rs 4,874 crore.
In a massive blow to telecom companies, the SC, on October 24, allowed the central government to recover Rs 92,641 crore in total AGR from telecom operators, including Bharti Airtel, Vodafone Idea, and Reliance Jio.
The apex court ordered the telecom companies to pay as much as Rs 1.4 trillion in past statutory dues after considering non-telecom revenues for their calculation.
The companies are seeking waiver of interest and penalties on the dues and extended payment timelines instead of three months mandated by the SC.
However, in a relief to telecom companies, the Union Cabinet on November 20, 2019, announced a Rs 42,000-crore package to debt-laden telecom companies after it agreed not to take any payments for spectrum they use for the next two years.
It approved giving Bharti Airtel, Vodafone Idea, and Reliance Jio the option to avail a two-year moratorium on payments they were supposed to make in yearly instalments for the spectrum bought in auctions.
Effectively, the benefit accruing to Bharti Airtel will be about Rs 11,746 crore, Vodafone Idea Rs 23,920 crore, and Reliance Jio Rs 6,670 crore.

Airtel, Voda Idea file separate pleas in SC seeking review of AGR verdict

In a move that takes the current telecom narrative to the next level, incumbent operators Bharti Airtel and Vodafone Idea have filed separate petitions in the Supreme Court, seeking a review of its judgment on dues linked to adjusted gross revenue (AGR). The order, upholding the government’s definition of AGR, implied telcos, including those who’ve shut their operations or have sold to others, would need to pay dues estimated at Rs 1.47 trillion, including spectrum usage charges (SUC). Of this, Rs 92,641 crore is the total AGR dues including penalties and interest etc.
Tata Teleservices, which had announced merging its consumer mobile business with Bharti Airtel in October 2017, has also filed a review petition in the apex court on the AGR verdict. A top executive at the Cellular Operators Association of India (COAI) confirmed that Videocon Telecommunications, which has closed down operations, and Norway-based Telenor, which sold its assets in seven circles to Airtel before leaving India, too have filed similar petitions.

At least Bharti Airtel and Vodafone Idea have asked for a waiver of the interest and penalty, along with the interest on penalty imposed by the court on the AGR and SUC payments. They have not contested the balance licence fee payable by them. Their petition is silent on staggered payment of the dues, in a departure from the demand made by the industry earlier.
The top court will now take a decision on whether to admit these petitions. A review petition can be filed within 30 days of the ruling, which, in this case, came on October 24.
The telcos were directed by the court to pay the money within 90 days from the date of the order.
Airtel, Voda Idea file separate pleas in SC seeking review of AGR verdict
Only the licence fee (minus the interest and penalty), something that telcos are willing to pay, comes to merely Rs 23,188 crore out of the Rs 92,641-crore AGR dues. In effect, that translates into just 25 per cent of what the apex court has asked them to fork out on AGR. The SC had imposed an interest of Rs 41,650 crore, a penalty of Rs 10,923 crore and an interest on penalty of Rs 16,878 crore.
For Bharti Airtel, just the licence fee dues will mean a payout of Rs 5,528 crore against an AGR demand of Rs 21,682 crore.
In the case of Vodafone Idea, the licence fee dues will amount to Rs 6,870 crore compared to the AGR demand of Rs 28,308 crore.
Just the licence fee dues of the two telcos will come to around a third of what the government has announced in spectrum payment relief, calculations show. The Union Cabinet on Wednesday approved a two-year moratorium for paying spectrum installments, with the relief estimated at Rs 42,000 crore for three telcos—Bharti Airtel, Vodafone Idea and Reliance Jio.
In the case of the Tatas, whose acquisition of the telecom business by Bharti Airtel is still going through regulatory clearances, the licence fee balance comes to Rs 2,321 crore against an AGR demand of Rs 9,987 crore.
For Telenor, the licence fee dues are pegged at Rs 529 crore but under the SC order, the company needs to fork out Rs 1,950 crore. The SUC will mean another Rs 900 crore, according to estimates. Similarly, for Videocon, which closed business in 2017, the SC order would mean a payout of Rs 1,032 crore.
But without the interest and penalty, the dues will be much lower at Rs 393 crore. Its SUC dues are estimated at Rs 300 crore.
Spokespersons of Bharti Airtel, TTSL and Vodafone India did not comment on the review petition. Questions sent to Telenor and Videocon did not elicit any response till the time of going to press.
Recently, COAI had, in a letter to the Department of Telecommunications (DoT), sought removal of the interest, penalty and interest on penalty imposed on them on AGR and SUC. It had also asked for a 10-year staggered payment to pay its dues with a two-year moratorium on payments.
Reliance Jio, which hasn’t filed any review petition, had welcomed the SC order, while protesting against any relief to the telcos. According to Jio’s communication with the government authorities, both Bharti Airtel as well as Vodafone Idea have enough cash to pay their dues.

Moratorium on spectrum payment, tariff hike won't offset AGR impact: Fitch

A two-year moratorium on payment of spectrum dues and hike in mobile call and data tariffs from next month may not be sufficient for Bharti Airtel and Vodafone-Idea to offset the impact of the Supreme Court ruling on payment of past statutory dues, Fitch Ratings said on Friday.
The Supreme Court had on October 24 ruled that non-telecom revenues will be included while calculating statutory dues towards the government.
"The decision by all three private Indian telecommunication companies (Airtel, Vodafone Idea and Reliance Jio) to raise tariffs from December 2019 and a two-year moratorium on payment of spectrum dues (announced by the government this week) are positive for the industry," Fitch said.
"However, these are unlikely to be sufficient to offset the impact of a recent Supreme Court judgment for incumbents Bharti Airtel and Vodafone Idea Ltd," it added.
Reliance Jio, a subsidiary of Reliance Industries Ltd (RIL), is not affected by the ruling and is likely to continue to gain revenue market share, which will support RIL's deleveraging plans, it said.
Fitch said it has a negative outlook on the telecom sector for 2020 primarily due to heightened financial risk associated with the large unpaid statutory dues.
On November 20, the government announced plans to suspend the payment of deferred spectrum dues for two years, which will ease cash flow pressure on all three telcos.
Vodafone Idea and Bharti will benefit the most as their negative free cash flow will reduce by USD 1.7 billion and USD 850 million a year, respectively, for the financial year ending March 2021 (FY21) and FY22, it said.
The incumbents are likely to file a review petition in the Supreme Court and have also approached the government to seek other forms of relief, including waiver or grant of deferred payment terms for the dues and reduction of licence fees and spectrum usage charges.
"Despite the tariff hike, Fitch still believes it will take negative rating action on Bharti if it pays the adjusted gross revenue (AGR) dues within three months and funds the payments entirely by debt," it said. "We will resolve the Rating Watch Negative on Bharti's ratings once we have greater clarity on the timing and financial impact of the regulatory dues and any remedial measures."
The divergence between Bharti's and Vodafone Idea's financial performance continued in 2QFY20, while Jio continued to report strong revenue and EBITDA growth.
During 2QFY20, Bharti reported a 1 per cent rise in revenue and 3 per cent growth in like-for-like EBITDA quarter on quarter (qoq). This was mainly driven by an 8 per cent increase in 4G subscribers and a largely flat blended tariff and subscriber base.
In comparison, Vodafone Idea's 2QFY20 revenue and EBITDA declined further by 4 per cent and 15 per cent, respectively qoq, as it lost 9 million customers while its blended tariff was flat.
Vodafone Idea's 2QFY20 EBITDA of Rs 10 billion benefitted from cost synergies from the merger of the two companies.
"We expect Vodafone Idea to continue to struggle to improve its EBITDA amid fierce competition, limited financial flexibility to invest and a shrinking subscriber base," Fitch said. "Vodafone Idea disclosed that it had to reclassify some long-term debt to current debt as it failed to meet certain financial covenants in bank loan documents, and it is in discussion with the lenders to request waivers."

On the other hand, Jio continued to report solid financial performance with 2QFY20 revenue rising by 6 per cent qoq and EBITDA up by 10 per cent. It gained about 24 million customers during the quarter to reach a total subscriber base of 355 million, ahead of Vodafone Idea's 311 million and Bharti's 279 million.
Jio's average revenue per user (ARPU), which does not include interconnection revenue, was flat at around Rs 120 even as data consumption increased to 12 GB per month per user and average voice consumption was 789 minutes per month per user, lower than Bharti's 848 minutes.
"ARPU per month is unsustainably low in India at about Rs 120 - one of the cheapest in the world. Assuming a 10 per cent tariff hike, we estimate the revenues of Bharti and Vodafone Idea to each increase by USD 400 million-500 million, while EBITDA would grow by USD 200 million-250 million.
"Jio is likely to benefit more from the tariff hikes as it is rapidly gaining market share, and is on its way to achieving at least 400 million subscribers and around 40% of industry revenue by 2H20," it said.
Fitch revised the outlook on RIL's long-term local-currency Issuer Default Rating (IDR) of 'BBB' to positive from stable in August 2019 based on its expectation of lower leverage as the pace of investment slows and its operating cash flow rises.
The benefits from the tariff hike and two-year moratorium of spectrum payments should help RIL further deleverage towards 1.5x net adjusted debt/operating EBITDAR, the level below which Fitch would consider positive rating action. The company's standalone credit profile is 'BBB' and its long-term foreign-currency IDR of 'BBB-' is constrained by India's country ceiling of 'BBB-', it added.

Airtel files review petition in SC for waiver in penalty, interest of AGR

Airtel on Friday filed a review petition in the Supreme Court for the waiver of interest and penalty in the AGR amount.
Sources said, they have filed for the interest and penalty waiver and not on seeking extension.

Review petitions are to be filed within a month of original decision which came on October 24. As per original order, impacted telcos have to pay the dues by January 24.
Bharti Airtel, Vodafone Idea and other telecom companies owe the government as much as Rs 1.47 lakh crore in past statutory dues, Telecom Minister Ravi Shankar Prasad had said in Parliament on Wednesday adding that there is no proposal at present to waive interest and penalties on such dues.
In replies to questions in the Lok Sabha, Prasad had said telecom companies owe the government Rs 92,642 crore in unpaid licence fee, and another Rs 55,054 crore in outstanding spectrum usage charge. In the case of Bharti Airtel, the liabilities added up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904 crore is the SUC dues (not including the dues of Telenor and Tata Teleservices).
Airtel's colossal net loss of Rs 23,900 crore for just-ended September quarter was on account of exceptional charge pertaining to provisioning of Rs 28,450 crore towards the AGR dues, that included principle of Rs 6,164 crore, interest of Rs 12,219 crore, penalty of Rs 3,760 crore, and interest on penalty of Rs 6,307 crore.
In the case of Vodafone Idea, this number stands at a cumulative Rs 53,038 crore, including Rs 24,729 crore of spectrum usage charge (SUC) dues and Rs 28,309 crore in licence fee.
The government made it clear that it is not considering any proposal on waiver of penalties and interest on outstanding licence fee based on adjusted gross revenue (AGR), or on extending the timelines for telecom companies to pay up their statutory dues.
"No such proposal is under consideration of the government as on date," Prasad said while responding to specific questions on whether the government proposes to provide a waiver for penalties and interest on the non-payment of license fee on AGRs by telecom operators and also on whether it is consider ing extending the time limit for the payment of license fee, penalty, interest and other dues.

Breather for telcos: 2-year moratorium on payment of spectrum dues

The debt-ridden telecom industry, looking for financial relief from the government, has got a two-year moratorium in making payments for past spectrum auctions.
The Union Cabinet on Wednesday decided to defer spectrum payments dues of the telcos for 2020-21 and 2021-22, a move that will offer an estimated Rs 42,000-crore overall relief to Bharti Airtel, Vodafone Idea and Reliance Jio over the next two years. While Vodafone Idea has got the maximum relief of more than Rs 24,500 crore, Airtel and Jio’s moratorium is pegged at around Rs 11,000 crore and Rs 6,800 crore, respectively. The Cabinet decision is based on a recommendation by a committee of secretaries headed by Cabinet Secretary Rajiv Gauba.
This comes soon after all three private telecom operators announced they were raising mobile phone tariff. Sources said the government had asked telecom firms to set their house in order by raising tariffs before seeking relief. Setting a tariff floor was the other option. The recent Supreme Court order, asking telcos to pay AGR dues of around Rs 1.33 trillion, only pushed Bharti Airtel and Vodafone Idea to say the liabilities would make it tough for them to continue as going concerns. After the Cabinet meeting, Finance Minister Nirmala Sitharaman told the media in a late-night briefing that the deferred amount will be spread out equally over the remaining installments.
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However, she clarified that the existing time period specified for making the payments wouldn’t be extended. Also, the interest, as specified at the time of auctioning, would be charged so that the net present value (NPV) of the payable amount is retained.
The telecom firms opting for a two-year moratorium would need to provide a guarantee of the revised annual installment payable for 2022-23. Thanking Telecom Minister Ravi Shankar Prasad and the Department of Telecom (DoT) for supporting the industry and pushing the industry request to the FM, Cellular Operators Association of India director general Rajan S Mathews said, “this will certainly provide some immediate cash flow relief to the industry”.

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However, the association, representing all major telcos, has pointed out that the high level of levies and taxes continued to be a challenge for the sector. “The telcos pay up to 30 per cent of their revenues to the government, by way of various levies and taxes, which is an enormous burden on the industry. 30 per cent of what is collected is passed on to the government.”

Bharti Airtel defers Q2 results till Nov 14 over ambiguity on AGR verdict

Bharti Airtel said on Tuesday it has postponed its second-quarter earnings report to mid-November, as the wireless operator sought clarity on the court ruling asking telecom firms to cough up overdue payments to the government.
Shares of the company, which was expected to release its quarterly numbers later in the day, dropped 3.3 per cent in early trade.

The company's board, which met earlier in the day, accepted the management's recommendation to shift the September-quarter results to Nov. 14, the telecom operator said in a statement.
The Supreme Court last week upheld a demand by the country's telecoms department (DoT) that wireless carriers pay 920 billion rupees ($12.97 billion) in overdue levies and interest.
The company is approaching the DoT to seek clarity on the total amount involved and seek their support to deal with this "adverse outcome", Airtel said.
Airtel's rivals have also expressed concerns about the court ruling. Loss-making smaller rival Vodafone Idea said it will ask the federal government for relief on payments of at least $4 billion after the court ruling.

Seasonal impact: Telecom companies may see flat ARPU growth in Q2

Analysts expect India mobile revenue for Airtel and Vodafone Idea to decline quarter-on-quarter (QoQ), given the weak seasonality in Q2.
However, rapid growth of subscribers on broadband plans and consolidation with Tata Tele Services (TTSL) is likely to reduce the impact for Airtel.

Telecom results will be flagged off with Reliance Jio announcing its numbers on Friday (October 18).
There is a possibility that floods and service disruption across some circles in the country would impact the earnings before interest, tax, depreciation and amortisation (Ebitda) for telcos.
Average revenue per user (ARPU) trajectory will be similar to the last quarter with Jio remaining flat and Vodafone Idea and Airtel posting moderate growth.
“The July to September period is generally a seasonally weak quarter for Indian telcos. However, we expect seasonality to be pronounced this year due to floods in many parts of India during the quarter, leading to sequential declines in mobile Ebitdas for Airtel and Vodafone Idea,” said Varun Ahuja, research analyst, Credit Suisse.
Seasonal impact: Telecom companies may see flat ARPU growth in Q2
It is expected that Airtel’s consolidated Ebitda will remain largely flat QoQ as decline in India mobile Ebitda will be offset by growth in Africa and other fixed-line businesses.
Investors will, however, look for commentary on Airtel’s fixed line businesses after the launch of residential broadband services by Jio during the quarter. With remaining cost synergies likely to be back ended, analysts expect Vodafone Idea’s adjusted Ebitda to decline by 7 per cent QoQ. It will also be the first results presentation for Vodafone Idea’s new CEO Ravinder Takkar. Vodafone Idea may continue to lose market share and see a 3.8 per cent QoQ decline in subscriber base, leading to service revenue declining by 3.4 per cent QoQ.
“We estimate Airtel to report India mobile revenue dip of 1 per cent sequentially, although YoY revenue growth should improve by 5 per cent.
For Vodafone Idea, we expect progress on network integration to result in lower subscriber losses compared to the last quarter but revenues will still decline 3.5 per cent sequentially with continued market share loss,” wrote Navin Killa, analyst, UBS Global Research.
The brokerage expects Jio’s Q2 revenue to grow 7.6 per cent sequentially on the back of almost 24 million net subscriber additions and flat QoQ ARPU growth, driving 11.5 per cent QoQ growth in Ebitda. The commercial roll out of Jio’s fibre services is also expected to drag Ebitda despite revenue growth.
“Airtel’s subscribers should grow 3.3 per cent while ARPUs are expected to dilute by 2.5 per cent on account of Tata Teleservices (TTSL) merger with Bharti, as TTSL had low ARPU customers (below Rs 50). Airtel’s India wireless Ebitda should decline 4 per cent to Rs 2,400 crore on lower revenues, partly offset by stable network and other costs,” reported Aliasgar Shakir, research analyst, Motilal Oswal.
Investors will keep an eye on subscriber movement across telcos to understand evolving market share shifts and across the broadband subscriber base of incumbents Airtel and Vodafone Idea. Jio’s network expense commentary will be a key metric to be watched, given the fibre service launch.

Bharti Airtel reports Q1 consolidated net loss of Rs 2,866 crore

Telecom operator Bharti Airtel on Thursday posted a staggering Rs 2,866 crore loss for the first quarter of FY 2020, amid a fierce competition unleashed in the Indian telecom market by rival Reliance Jio.
Airtel had logged a net profit of Rs 97 crore in the same period of the previous year, Bharti Airtel said in a statement.

The revenue of the Sunil Mittal-led company rose 4.7 per cent to Rs 20,738 crore during the first quarter ended June 2019 as against Rs 19,799 crore in the year-ago period.
For the June quarter, Airtel's India Average Revenue Per User - a key performance metric of mobile phone operators - stood at Rs 129 against Rs 123 in the March quarter.
Commenting on the earnings, Gopal Vittal, MD and CEO (India and South Asia), Bharti Airtel said the first quarter of the year has begun with a "healthy and equitable growth across all our lines of businesses".
"Headline pricing remained stable, albeit at low levels. We continue to remain focused on providing value to customers through our rewards platform, Airtel Thanks. This has led to the second consecutive quarter of ARPU increase," he said.

Airtel Africa falls in London trading debut after raising $750 million

Bharti Airtel Ltd.’s Africa unit fell in its London trading debut after raising about $750 million in an initial public offering to help the India-based wireless operator pare debt.
Airtel Africa Ltd. dropped 13% to 70 pence per share as of 8.13am in London, from an offer price of 80 pence a share, at the low end of the company’s range. The offer gave Airtel Africa a market capitalisation of about 3.1 billion pounds ($3.93 billion), according to a statement from the company on Friday.

The soft trading debut for the African carrier, the continent’s second-largest by subscribers, comes as parent Bharti Airtel struggles in India with a years-long price war and mounting debt. Along with rivals Vodafone Idea Ltd. and Reliance Jio Infocomm Ltd., Bharti is also preparing to upgrade to a fifth-generation network, a step that could cost the industry as much as $70 billion, the country’s regulator estimates.
Bharti’s Airtel Africa sale joins Volkswagen AG in pricing IPOs at the low end of a target range for listings that both started trading on Friday. Volkswagen raised $1.8 billion through the IPO of its truck unit, Traton. Low interest rates have helped keep up demand on stock markets, and many other companies that have proceeded did well.
Raghunath Mandava, CEO of Airtel Africa, said the IPO was a “proud moment,” in the company’s statement. “We are delighted by the strong response we have received from the many high-quality investors from around the world,” he said.
The Airtel Africa sale is among the largest IPOs announced in 2019 in London, where emerging markets companies are boosting volumes amid a lackluster year for domestic sales. Middle Eastern payments processor Network International Holdings Plc raised 1.1 billion pounds last month in the largest London IPO this year. Finablr, the currency-exchange firm controlled by an Abu Dhabi-based billionaire, also debuted last month after slashing the price on low investor demand.
Airtel Africa already raised $1.25 billion last year from investors including Temasek Holdings Pte and SoftBank Group Corp. and the company has said it’s also planning to pursue a local secondary listing in Nigeria.
(With assistance from Swetha Gopinath and Dave McCombs.)

Bharti Airtel Q4 net profit up 24.4% at Rs 107.2 crore; revenue rises 6.2%

Bharti Airtel Ltd on Monday reported a 24.4% rise in fourth-quarter net profit at Rs 107.2 crore in the quarter ended March 31.
The company's revenue rose 6.2% to Rs 20,602 crore.

The company also reported an exceptional gain of Rs 2,022 crore.
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Brokerage firm Emkay Global had said in a note, "Increased network opex, led by aggressive rollouts, should impact earnings before interest, taxes, depreciation, and amortisation (EBITDA) which may dip 12.2 per cent on a YoY basis to Rs 6,085.4 crore. The EBITDA margin is seen to decrease 572 bps YoY at 29.6 per cent. Africa revenue is likely decline 3 per cent on a QoQ basis, impacted by rupee appreciation."

Incumbents' minimum ARPU plans will result in 50 mn customer base erosion

As telecom incumbents Bharti Airtel and Vodafone Idea (VIL) seek to shed their low revenue customer base to improve profitability, they are likely to witness a gradual ARPU increase even as over 50 million customers are likely to move out, say analysts.
In October, Airtel said it will stay out of the feature phone and 2G customers base competition as it continues to focus on long-term high-end customers during the second quarter results. Airtel’s strategy is to raise minimum ARPU through a revised focus on recharge plans (also starting at Rs 35) as well as the rapid roll-out of 4G sites to address a smartphone-led subscriber base. The move is likely to impact between 70 to 100 million of their low ARPU user base.

“The introduction of the new Rs. 35 minimum will only impact the 2G voice only users – lifting this cohort from Rs. ~20 at present to around Rs. 35. This, plus the loss of lower end subscribers, should result in the average blended APRU for Bharti increasing by 12% to Rs. 113 and for Vodafone Idea seeing their ARPU increase by 14% to Rs. 101,” noted Bernstein analyst analyst Chris Lane in a note to investors. The report also said that while analysts expect ARPU upside for both Bharti and Vodafone this year as they cancel lower value SIMs, but don't expect 3G/4G pricing to start to creep up until 2020.
Rival Vodafone Idea has shared plans to raise the minimum recharge tariffs to improve profitability. According to the plan, a subscriber will now need to recharge for a minimum of Rs 35 per month for integrated data and voice services in order to keep the SIM card active.
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Telecom Regulatory Authority of India (TRAI) has directed the telcos to inform subscribers in a clear and transparent manner about the changes following customer complaints. But the telcos are legally entitled to withdraw any tariff plan that is older than six months.
“The new simplified tariff plan gives us a monthly recurring income at a minimum Rs 35 per month (including data services). We believe consumers have the capacity to spend and the tariffs will stabilise, “ VIL CEO Balesh Sharma said earlier.While Bharti has disclosed 100 million customers currently spending less than Rs. 35/month and the estimate this base for Vodafone Idea at ~150 million. Assuming 20% of these customers to exit or leave the operators, would result in Bharti losing ~20M customers and Vodafone Idea losing a similar ~30 million. These customers will also be unable to meet the lowest recharge requirements for Jio, meaning they will either exit the market or migrate to BSNL/MTNL.
BSNL/MTNL are likely to keep a steady revenue market share of less than 5 per cent even as they gain roughly 10 per cent of the subs exiting Airtel and VIL as the incumbent telcos and Jio battle it out for market share over the next few years.

Trai slaps fines on Jio, Airtel, others for not meeting quality norms

Regulator TRAI has imposed penalties on major telecom operators, including Reliance Jio, Bharti Airtel, Vodafone and Idea Cellular (now merged), for slipping on various service quality benchmarks for the March quarter, according to multiple sources.
The fines cover various parameters and service areas, and all the operators are in the process of making the payment, sources told PTI.
About Rs 3.4 million fine has been imposed for March 2018 quarter on Reliance Jio, the aggressive player whose offerings since 2016 have shaken the market and triggered a bruising tariff war among operators.
The penalty on the Mukesh Ambani-led firm is on account of Trai-defined service quality parameters, including Point of Interconnect congestion, accessibility of call centres or customer care, and percentage of calls answered by operators (voice to voice) in a set timeframe.
An e-mail sent to Reliance Jio seeking its response on the penalty did not elicit a response.
Maintaining its watch on service quality in the sector, the Telecom Regulatory Authority of India (Trai) had tightened the rules and asked players to abide by its new quality of service (QoS) benchmarks from October 1, 2017.
The latest assessment reflects how the operators have fared between January and March 2018 on Trai's new service quality benchmarks.

ALSO READ: Trai to meet telcos soon on concerns over pesky call rules: R S Sharma
Bharti Airtel -- which was the largest telecom operator in the country till the merger of Vodafone and Idea Cellular shuffled the pecking order late last month -- has been fined to the tune of about Rs 1.1 million for the three months to March, as per sources.
Its penalties are on account of norms relating to metering and billing (postpaid), accessibility of call centre and customer care, percentage of calls answered by operators within defined timeframe parameters.
The fine imposed on Idea Cellular is about Rs 1.25 million for the March quarter.
The penalties pertain to various circles on parametres like call drops, percentage of calls answered by operators within a set timeframe, and requests for closure of services complied within seven days.
ALSO READ: Telcos seek regulatory stability, urge Trai to outline priorities for 2 yrs
In case of Vodafone, the March quarter penalties stood at only about Rs 400,000 on issues like metering and billing (pre-paid), time taken to comply with request for termination or closure of service, and percentage of calls answered by operators within a timeframe.
While Bharti Airtel declined to comment, Idea Cellular and Vodafone did not respond to e-mails queries on the issue.
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Trai Chairman R S Sharma had earlier told PTI that the regulator is in the final stage of imposing penalty on operators which have not met service quality norms for the March quarter, but had not given details.
Trai has been maintaining that it does not wish to name specific operators or penalties slapped on them for not meeting the service quality criteria. Accordingly, it has never published this information either on its website or through a statement.
As per the new quality of service benchmarks of Trai, now call drops are measured at mobile tower level instead of telecom circle level. Trai was of the view that average calculated at circle level may hide many issues.

DoT okays Airtel-Telenor merger; here is how the deal unfolded

The department of telecommunications (DoT) has approved the merger of Bharti Airtel and Telenor India.
All customers of Telenor India would become part of Airtel’s. The latter will get 43.4 MHz of spectrum in the 1,800 MHz band from Telenor.

This comes a few days after the Supreme Court dismissed DoT’s petition against telecom tribunal TDSAT asking the government to clear the merger without insisting on a bank guarantee of about Rs 15 billion from Airtel for one-time spectrum charges — this was for holding of spectrum beyond 4.4 MHz.
A DoT notification said with approval of the merger, all assets and liabilities pertaining to Telenor India stand transferred to Bharti Airtel. “The present merger is taken on record without prejudice to the rights, contentions, remedies and steps which may be taken by the department, in pursuance of any subsequent orders, judgements or decisions,” it said.
Airtel will acquire Telenor India’s operations in seven of the country’s 22 telecom circles — Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. These represent high population concentration and, therefore, offer high potential for growth.
DoT approves merger of Airtel and Telenor; here is how the deal unfolded
After the deal’s approval, Airtel will formally buy Telenor India in a no-cash deal and take over its spectrum payment dues of about Rs 16.5 billion. The deal will bolster its spectrum holding to 979.45 MHz (all bands) and narrow its revenue and subscriber market share gap with the coming Vodafone-Idea Cellular combine.
The Vodafone-Idea merger will be approved soon by DoT. It would create the country's largest mobile telecom operator, with a subscriber base of a little over 400 million. Followed by Airtel with 330 mn customers. Vodafone-Idea will lead the market with the highest revenue share of about 37 per cent, followed by Airtel with 32.3 per cent.

UIDAI suspends Airtel, Airtel Payments Bank's eKYC licence

In its strongest action yet, the UIDAI has temporarily barred Bharti Airtel and Airtel Payments Bank from conducting Aadhaar-based SIM verification of mobile customers using eKYC process as well as e-KYC of payments bank clients.
The action follows allegations of Bharti Airtel using the Aadhaar-eKYC based SIM verification process to open payments bank accounts of its subscribers without their 'informed consent'. UIDAI also took strong objection to allegations that such payments bank accounts are being linked to receive LPG subsidy.

UIDAI, in an interim order, "suspended e-KYC licence key of Bharti Airtel Ltd and Airtel Payment Bank Ltd with immediate effect," sources with direct knowledge of the development said.
This essentially means Airtel would not be able to, in the interim, carry out 'electronic-verification' or link mobile SIMs of its customers with their 12-digit biometric national ID Aadhaar though the efficient and paperless eKYC (or electronic Know Your Customer) process of UIDAI.
Also, Airtel Payments Bank will not be able to open a new account with Aadhaar e-KYC. However, accounts can be opened through alternate methods, if available.
When contacted, an Airtel spokesperson said: "We can confirm that we have received interim order from the UIDAI regarding temporary suspension of Aadhaar linked e-KYC services till their satisfaction on certain processes relating to Airtel payment banks onboarding of customers."
"We are engaging with the authority and are hopeful of an early resolution. We are also undertaking to complete the said actions on priority and have commenced thorough checks of our process flows.
"Being compliant to all guidelines is paramount to us. In the interim, any inconvenience to our customers is regretted," the spokesperson said.
More than 23 lakh customers have reportedly received as many as Rs 47 crore in their Airtel bank accounts, which they did not know had been opened.
Sources said it was brought to the notice of the Unique Identification Authority of India (UIDAI) that at the time of mobile verification using Aadhaar e-KYC, the Airtel retailers were also opening Airtel Payments Bank accounts, without informed consent of the user.
Government LPG subsidy was also getting transferred to these accounts, without their consent.
UIDAI observed that as per agreement with the authority, Airtel and Airtel Bank are duty bound and under obligation to ensure security and privacy of residents' identity information.
Security and privacy of Aadhaar data is a highly sensitive matter and the Supreme Court is looking into its various aspects.
Suspending the 'e-KYC licence key', UIDAI ordered PricewaterhouseCoopers to conduct an audit of Bharti Airtel and Airtel Payments Bank to ascertain if their systems and processes are in compliance with the Aadhaar Act.
UIDAI may consider revocation of suspension or decide further necessary action upon receipt of the report.
The alleged actions of Airtel and Airtel Payments Bank were found to be in violation of different sections of the Aadhaar Act, 2016, which mandates obtaining explicit consent of the individual. Violations are liable to be punished with Rs 1 lakh per day fine and termination of authentication user agreements.
Both Bharti Airtel and Airtel Payments Bank were appointed as Authentication User Agencies (AUA) by UIDAI and had entered into an agreement with UIDAI in February 2015 and September 2016 respectively for the purposes of availing authentication services provided by the authority.
Sources said in response to the first notice of September 18, Airtel and Airtel Bank stated that they have amended their process and the opening of a bank account is completely de- linked from the process of re-verification of mobile connection.
These replies were found to be unsatisfactory by UIDAI, which issued another notice on November 24. The company responded by saying no bank account was opened without the consent of the customers and additional safeguards have been introduced.
The replies too were found to be unsatisfactory as UIDAI continued to receive numerous complaints of unauthorised opening of Airtel Payments Bank accounts.
Sources said the interim order listed out some of the complaints and went on to state that Airtel and Airtel Bank had made "false statements" to "deceive and mislead" UIDAI.
When UIDAI reviewed the Airtel mobile app, it found that when the app is opened, along with the welcome message a pre- ticked consent box is momentarily flashed on the screen which states "Upgrade or create my Airtel Payment Bank wallet using existing Airtel mobile KYC."
This was found to reflect blatant disregard of Aadhaar Act and Regulations.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)