Tata Tele, MTNL shares zoom 12% as government weighs AGR dues waiver

Shares of Tata Teleservices (Maharashtra) and state-owned MTNL rallied up to 12% amid reports that the government may announce partial waiver of AGR dues in the Budget on February 1.

The proposal to waive 50% of interest and 100% of penalties and interest on penalties will offer financial relief of over Rs 1 lakh crore for telcos, ET reported.

On the heels of last month’s relief measure—waiving the requirement for submitting bank guarantees for past spectrum dues, the The government is working to announce the measure—the second such substantial relief package for the debt-laden sector since September 2021—in the February 1 budget, the report said.


So far, the companies have paid around Rs 37,000 crore in AGR dues to the government, following the Supreme Court order. Bharti Airtel has paid about Rs 19,000 crore, followed by Rs 13,500 crore by Vodafone Idea and Rs 4,197 crore by Tata Teleservices.

The amount paid by Vi includes the equity conversion by the government.

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The telecom industry, which had been reeling financially due to cutthroat competition since the entry of Reliance Jio in 2016, suffered a body blow when the Supreme Court in October 2019 backed the government’s view and levied Rs 1.47 lakh crore of AGR dues.

This comprised Rs 92,642 crore of licence fees and spectrum usage charges (SUC) of Rs 55,054 crore. Nearly 75% of the dues consisted of interest, penalties and interest on penalties.

In the morning session, Tata Tele shares rallied up t0 12.5% to day's high of Rs 80.38 on BSE while MTNL shares shot up to 12% to Rs 52.48 on the stock exchange.

The impact was also seen in the case of Vodafone Idea whose shares were locked in the 10% upper circuit limit at Rs 10.03.

"In the event of a relief, we estimate that the per share upside can be Rs62/Rs7/Rs29 for Airtel/Vi/Hexacom. This relief, in addition to the recently announced bank guarantee waiver, brightens the chances of Vi’s Rs 250bn debt raise and completion of its Rs 500bn-Rs 550bn capex programme through FY27. While this would pave the way for Vi to execute its revival plan, we estimate that the cash drain even with the Rs 115bn pa potential relief would still be significant in the next few years (with liberal ARPU assumptions). There is a high chance of the government converting a part of Vi’s dues into equity," IIFL Securities said.

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