Union Minister Jyotiraditya Scindia said on September 23 that the government is currently examining the impact of the Supreme Court's rejection of private telecom operators' curative plea for re-computation of dues they owe to the government. He, however, added that India's telecom sector is "extremely robust" with four telecom service providers.
"The judgement of SC has just come. At this point, whatever the SC has ordained, according to the process, has to be executed. We are going through the process of examining that. We are seeing what the repercussions are there, but let me say this...our telecom sector is extremely robust, with four players...There are very few countries with four players, and India is one of them. I look at a very strong telecom sector moving forward.I also hope BSNL also a very strong play," Scindia told reporters.
The ruling is considered a significant setback for telecommunications operators, especially Vodafone Idea, which is cash-strapped and owes the government thousands of crores in fees.
Scindia previously told Moneycontrol the government wouldn't interfere in Vodafone Idea's operations, in which the Centre owns a 23.8 percent stake. "Vodafone Idea has its own professional management, and therefore, what happens in the financial and operational workings of a company is their business and not our business as a ministry," the minister told Moneycontrol in an interview on August 29.
Vodafone Idea’s chief executive officer, Akshaya Moondra, separately, said on September 23 that the struggling telecom operator has initiated "fresh dialogues" with the government after the Supreme Court's decision.
"Have initiated fresh dialogue with government on likely remedies," Vi CEO Akshaya Moondra said in an investors' call, adding that the telco's long-term business plans and strategy will remain unaffected despite the negative outcome of the curative pleas. "For the AGR dues case we believe this will be the outcome from the court. The action on AGR dues now falls onto the government. We are in the process of putting a request with the government for AGR dues."
“The outcome of the curative petition is disappointing but does not impact the company’s long-term business plan and existing liabilities,” the CEO said, adding that the firm has started a fresh dialogue with the government for a possible remedy.
Moondra spoke during an investor call a few days after the Supreme Court rejected several petitions filed by several telcos over the re-calculation of adjusted gross revenue (AGR) dues.
BoFA Securities, in a September 23 note, said that the Supreme Court's recent decision will be directionally positive for Bharti Airtel, despite the telco facing a $4.3 billion fine.
"This is because Bharti's competitor VIL ($8.5bn mkt cap) faces $8.4bn AGR dues. This could lead to Bharti gaining market share at the expense of VIL (likely 1-2 pps in 12-18 months) if the latter scales back on capex or we could see earlier than expected tariff hike (potentially nudged by the government) that would aid VIL but also helping Bharti as well," BoFA said.
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