Pressure On Telecom Companies To Increase Tariff

Pressure on telecom companies to increase tariff, know how much burden can increase in your pocket every month. The Supreme Court’s decision in the Adjusted Gross Revenue (AGR) dues case did not bring as much relief to the telecom companies as they needed. The Supreme Court has ordered telecom companies to repay AGR dues within 10 years. Apart from this, the apex court has asked to pay 10 percent of the total amount by March 31, 2021.

According to experts, this decision is a shock for Vodafone Idea and other telecom companies under debt. These companies, which are struggling with cash flow, now have no option but to increase the tariff to repay the debt. Vodafone Idea may be forced to sell its stake in the company to pay the AGR dues.

According to rating agency Iqra, it is not easy for the telecom sector already in debt to repay any amount due to AGR dues. The total on this sector as on 31 March 2020 was equivalent to Rs 4.4 lakh crore. Considering the current situation, by March 31, 2021, it is estimated to reach the level of Rs 4.6 lakh crore. Obviously, companies may have to increase tariffs to create cash flow and to deal with the situation.

Crisil rating director Nitesh Jain said that telecom services tariff could be increased by Rs 20-30 per month to overcome debt pressure. CRISIL Senior Director Sachin Gupta said that due to the increasing pressure, the financial condition and balance sheet of the companies are set to deteriorate.

Sensex and Nifty gained momentum in early trade on Wednesday due to positive global cues and strong buying sentiment. Sensex, a 30-share sensitive index of the BSE, opened marginally lower at 38,892.64 points on Wednesday. However, it saw a boom over time. At 10 am, Sensex was up 111.65 points, or 0.29 per cent, at the level of 39,012.45. Sensex was the highest among the shares of UltraTech Cement at 3.41 per cent, Tech Mahindra by 2.08 per cent and ONGC by 1.39 per cent.