The Supreme Court ruled in favor of the government on the adjusted gross revenue (AGR) issue with telcos and has instructed telcos to pay all past dues along with interest, penalties, and interest on penalties.

If the telcos were to eventually have to pay per the ruling, the potential payments could be US$3-4bn for Airtel and US$4bn for Vodafone Idea.

This could cause net debt to EBITDA ratios for the telcos to deteriorate – from 3.3x to 4.1x for Airtel and from 20x to 26x for Vodafone Idea.

The clarity provided by the court now could increase license fee payout as well. Per a press release from Vodafone Idea, the company could ask for a ‘review application’ if there are technical and procedural grounds for doing so.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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