Bharti Airtel felt the industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole.
The Supreme Court, on January 16, dismissed a review petition filed by telecom companies seeking relief from the Adjusted Gross Revenue (AGR) verdict.
"It is a big shock for Vodafone Idea and Kumar Mangalam Birla. The Chairman of Vodafone Idea already said that they would shut shop if they don't get a relief in AGR case," Nitin Soni of Fitch Ratings told CNBC-TV18.
"Bharti Airtel has money to pay these dues, but we need to check whether the tariff hikes are sufficient enough or not for change in outlook on the company and rating," he said.
Earlier this week, Bharti Airtel completed a massive fund raising exercise by raising $3 billion through the QIP and FCCB route as the telecom operator has been preparing for payment of statutory dues of more than Rs 35,000 crore.
"Markets were expecting some respite in AGR case, but they are now disappointed with this judgement, which suggests that now India will have two player market," Rajiv Sharma of SBICap Securities said in an interview to CNBC-TV18.
"For Vodafone Idea, which owes government around Rs 53,000 crore, this is seems to be or pretty much the end of the road, though theoretically there is a case of curative petition filing. But there is a limitation after Supreme Court's decision," said telecom expert, Mahesh Uppal.
He further said, "Vodafone situation is very precarious, the company itself went on record that it wants to quit if there is no relief. I do believe it is a bad news."
"For a global major like Vodafone, which is not like a small player, the news sends extremely worrying signals for country like India which should prepare for that," he added.
In total, 15 telecom companies would have to pay dues worth Rs 1.47 lakh crore. After this judgement, it clearly indicated that they have to make a payment of license fee dues by January 23, 2020.
"If they (Vodafone Idea) are not pumping in money for the adoption of new technology for 4G and 5G, then needless to say there could be two players," SS Sirohi, the Former Member of Telecom Commission said.
After the judgement, Bharti Airtel, in its BSE filing, said they were evaluating the option of filing a curative petition.
"While respecting the Honourable Supreme Court's decision, we would like to express our disappointment as we believe the long standing disputes raised regarding the AGR definition were bonafide and genuine," the telecom operator said.
Company feels the industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole.
"The industry needs to continue to invest in expanding networks, acquiring spectrum and introducing new technologies like 5G. The money now required to pay punitive interest, penalty and interest on penalty which forms nearly 75 percent of AGR dues would have better served the digital mission of the country," Airtel added.
Bharti Airtel and Vodafone Idea, in total, reported a loss of nearly Rs 74,000 crore in quarter that ended on September 2019 on account of provision for AGR dues.
As per the latest telecom subscribers data for November, Vodafone India lost 3.64 crore subscribers in a month against addition of 1.89 lakh users in previous month. It still has 33.62 crore subscribers, making it the number two company in India.
Reliance Jio is the number one player in terms of subscribers (36.99 crore), adding 56 lakh users during November as against 91 lakh users that were added in October 2019. Bharti Airtel added 16 lakh users in November 2019 (against 81,974 users in October), taking total to 32.73 crore subscribers by end of November 2019.
SS Sirohi, the Former Member of Telecom Commission, said the judgement was comprehensive and there was no merit in review, but the issue related to PSUs is different, there could be some relief for them.
PSUs including GAIL, IOC, Power Grid etc are expected to pay more than Rs 3 lakh crore. Reports suggested that PSUs are likely to file review petitions soon.
"If telecom infrastructure provider RailTel's review petition dismissed by the court, then there could be more trouble for other PSUs also," Rajiv Sharma said.
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