Budget Data Indicates Some AGR Dues Payment Probably In FY20: Goldman Sachs

Budget data indicates that authorities could be hoping to obtain the principal part of statutory accountability from telecom companies from the present financial year , Goldman Sachs said on Monday.

In its most recent industry report, Goldman Sachs noted that government has revised upward anticipated profits in FY20 from’Additional Communication Services’, and included that part of this could be credited to recurring permit fee/spectrum fees and deferred payment accountability, an estimated $ 2.9 billion (approximately Rs 20,700 crore) are probably from different avenue.

“We notice that this $ 2.9 billion is approximately equal to the principal-only part of Bharti and Vodafone Idea’s joint AGR-related accountability,” it stated.

The authorities on Saturday more than doubled its earnings estimate in the debt-ridden telecom industry to Rs 1. 33 trillion for 2020-21 largely due to statutory dues based on adjusted gross revenue (AGR).

The authorities from the reception budget has improved a sales collection of approximately $ 1,33,027 crore for fiscal year 2020-21 under communications thoughts. It anticipates a sales of Rs 58,686. 64 crore under this head in the present financial year against budgeted sum of Rs 50,519.8 in 2019-20.

“The anticipated profits in FY21 each funding suggests roughly $ 15 billion non-recurring payment from telcos (according to our calculations); nonetheless it’s uncertain if this just accounts for prospective spectrum auction proceeds, or if there’s a part of AGR liability from the sum,” Goldman Sachs notice additional.

Telcos’ capacity to participate in spectrum auctions in the long run remains a doubt, it detected.

“Up to the FY21 earnings of $ 19 billion (Rs 1.3 trillion ) are worried, of which we quote $ 15 billion in non-recurring payment (according to our estimate of sector earnings in FY21), telcos’ ability to participate in spectrum auctions in the near term remains a doubt,” it stated.

It added, is particularly true when Bharti Airtel and Vodafone Idea were to make significant obligations for AGR liability at the brief term, ” it stated.

Further, given Vodafone Idea’s stretched balance sheet, it doesn’t expect the company to participate in spectrum auctions in the long run.

It’s pertinent to mention that 15 entities owe the government about Rs . 47 trillion in previous dues — Rs 92,642 crore in outstanding licence fee and another Rs 55,054 crore in outstanding range utilization fees.

The Supreme Court, in October this past year, had declared the government’s position on adding earnings from non-core companies in calculating the yearly AGR of telecom businesses, a share of that is compensated as license and spectrum fee into the exchequer.

In the instance of Bharti Airtel, the obligations add up to almost Rs 35,586 crore, of which Rs 21,682 crore is license fee and another Rs 13,904. 01 crore is spectrum use fee dues (not including the dues of Telenor and Tata Teleservices).

Airtel, which recently raised $ 3 billion during Licensed Institutional Placement (QIP) and convertible bonds course, is scheduled to announce its third quarter results on Tuesday.

Vodafone Idea, that can be staring at outstanding statutory dues of Rs 53,038 crore, including Rs 24,729 crore of range dues and Rs 28,309 crore in license fee, has warned of shutdown if no aid is provided.

The majority of the rest of the accountability is with state-owned BSNL/MTNL and a number of those shut/bankrupt telecom businesses.

Bharti Airtel, Vodafone Idea, and Tata Teleservices have filed a modification application in the Supreme Court looking for additional time to cover statutory dues.―Market Research Correspondent