Dismissal of review petition on AGR credit negative for telecom sector: ICRA

NEW DELHI: The dismissal of review petition on adjusted gross revenue (AGR) payouts by Supreme Court is a credit negative for the telecom sector that is saddled with higher debt and weak profitability metrics, financial ratings firm ICRA said in a note on Friday.

“While there were green shoots of improving operating metrics which supported by tariff hikes and part relief from government through deferment of spectrum liability payments have been recent positives for the sector, the AGR payment liability remains large and payable within short timeline,” said Anupama Arora, vice president and sector head, corporate ratings, ICRA.

Arora further said that government intervention would be needed to safeguard viability of existing operators, ensuring continued investments in technology, spectrum as well as prevent any cascading impact on ancillary sectors and financial system.