In a setback to telecom operators Bharti Airtel and Vodafone-Idea, the Supreme Court on Thursday dismissed their plea seeking a review of its earlier order asking them to pay ₹1.47-lakh crore in past statutory dues of adjusted gross revenue (AGR) by January 23.

“Applications for hearing in open court/ oral hearing are rejected. Having perused the review petition and the connected papers with meticulous care, we do not find any justifiable reason to entertain the review petitions. The review petitions are, accordingly, dismissed,” a Bench comprising Justices Arun Mishra, S Abdul Nazeer and MR Shah said in the order.

The apex court verdict may force Vodafone-Idea to shut shop, as the company has already made huge investments and there is not much to gain from its operations, due to steep competition from Reliance Jio and Airtel.

Kumar Mangalam Birla, Chairman, Vodafone-Idea, had also recently said that Vodafone may have to shut shop if the government does not agree to provide relief in the AGR case.

Piling dues

While Airtel has dues of over ₹35,500 crore, Vodafone Idea needs to pay more than ₹53,000 crore. Tata Teleservices, which has sold its consumer mobility business to Airtel, faces dues of ₹13,823 crore.

Read more: Airtel evaluates curative petition on Adjusted Gross Revenue

“It makes the exit of Vodafone-Idea from India’s telecom sector near imminent, given the clear statements to this effect by the company’s promoters. This is bad optics for India which wants to attract foreign investment, not see it leave. Further, the reduced competition in the market is not just bad for telecom consumers but also for the government when it auctions 5G and other spectrum in the coming months,” Mahesh Uppal, Director at Com First (India), told BusinessLine.

An Airtel spokesperson said the company was disappointed with the verdict and was evaluating whether to file a curative petition. “We believe the long-standing disputes raised regarding the AGR definition were bonafide and genuine. The industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole,” the spokesperson said.

Airtel said the industry needs to continue investing in expanding networks, acquiring spectrum and introducing new technology such as 5G. “The money now required to pay punitive interest, penalty and interest on penalty, which forms nearly 75 per cent of AGR dues, would have better served the digital mission of the country,” it added.

In a stock exchange filing, Vodafone-Idea said: “The company is exploring further options, including filing of a curative petition.”

But, analysts feel that if Vodafone-Idea shuts down its business, it will indirectly benefit Airtel. “Irrespective of the final outcome on the AGR case, Airtel remains best positioned from a medium term perspective. Vodafone-Idea will continue to lose market share in the interim as it battles the dual challenges of financial and operational pain,” said Himanshu Shah, analyst at Dolat Capital.

Also read: All you wanted to know about AGR

The Supreme Court order of October 24 had directed operators to pay up their dues by January 23 following which the operators had sought a limited review of the ruling. The telcos had sought a review of certain directions of the Supreme Court on recovery of past dues amounting to ₹1.47-lakh crore from telecom service providers.

The recovery of past dues by the government was based on AGR of around ₹92,000 crore. The October 24 verdict had widened the definition of AGR to include non-core revenue, leaving telcos and even non-telcos facing hefty statutory dues of more than ₹4.45 lakh.

Rising financial stress

The Cellular Operators Association of India said the latest order is the ‘last straw in contributing to financial distress and it remains to be seen whether the industry will be able to recover from this setback’.

“This added financial pressure on the sector will also adversely impact Prime Minister, Narendra Modi’s vision of ‘Digital India’,” said Rajan S Mathews, Director General.

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