AGR dues for Telecom Industry

Telecom Industry

The relatively shorter payment timeframe for telecom operators to repay AGR dues exerts additional pressure on their cash flows and necessitates sizeable average revenue per user (ARPU) increase that can have an impact on the industry structure, according to investment information firm ICRA.

The Supreme Court on Tuesday pronounced its judgment on the adjusted gross revenue (AGR) case and allowed a 10-year payment term as against 20 years proposed by the Department of Telecommunications, with 10 per cent upfront payment for repayment amounting to about Rs 90,000 crore for the three telcos.

Ankit Jain, Assistant Vice President for Corporate Ratings at ICRA said the proposed payment pattern adds to the burden of the industry which is already saddled with elevated debt levels. This will also exert pressure on the cash-flows and leaves limited room for network capex and expansion, especially for the relatively weaker players.

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