Telcos should pay license fee to break AGR deadlock: IIFL Securities

IIFL Securities said that one of the possible solutions to the Adjusted Gross Revenue (AGR) impasse would include telcos paying up the license fee (LF) excluding the (Spectrum Usage Charge) dues basis self-assessment.

“In our view, a possible solution for the AGR impasse could be telcos quickly paying LF (Licence Fee) but not SUC (Spectrum Usage Charge) dues to the government, on a self-assessment basis,” it said in a statement.

The Supreme Court (SC), according to the firm, has not objected to the principle of self-assessment and the original litigation pertained to only LF and not SUC.

Financial services company, however, also said that in case Vodafone Idea files for bankruptcy, the situation would be different, and payments would be stopped.

“If a bankruptcy case, all payments would be immediately stopped, assets would be liquidated and creditor claims settled in a predetermined order of priority,” it said in a statement.

However, the firm said that the top court has ordered payment to the government, and such a move would only result in the lack of clarity on stopping all payments.

Vodafone Idea has a maximum outstanding worth nearly Rs 57,000 crore.

“As SUC was not part of the original litigation between the Department of Telecommunications (DoT) and telcos, we see some wiggle room for the government here,” the IIFL added.

The Supreme Court has not dismissed the modification plea of telcos including Bharti Airtel, Vodafone Idea and Tata Teleservices, and has scheduled the next hearing on March 17 and ordered telcos to pay by then.

Sunil Mittal-driven Bharti Airtel on Monday deposited Rs 10,000 crore and Tata Teleservices Rs 2,197 crore, followed by Vodafone Idea which made a payment of Rs 2,500 crore.