Bharti Airtel is better placed to make upfront payment for AGR dues as due to cash availability and assets available for monetisation, it is better placed to raise funds from the market.
According to a research by Axis Capital, Bharti Airtel is better placed to make payments and gain market share.
Bharti's balance AGR dues are at Rs 260 billion. If the court accepts a 20-year staggered plan for balance AGR dues, maintaining the same NPV with 7.5% interest rate will result in cash outgo of Rs 25.5 billion per year.
Bharti looks in a position to make this payment from existing cash flow with increased tariff in December 2019. In case of 10-year staggered payment, yearly payment increases to Rs 37.8 billion, which also looks manageable.
Axis Capital said Bharti is better placed to make upfront payment in case of court order for AGR dues as it had Rs 136 billion in cash at end of Q4FY20 and it has assets available for monetisation and is better placed to raise funds from the market.
"We expect VIL to cut its capex (with its balance sheet stretched further), hurting its network quality and marketing expense, making it difficult to retain market share. Bharti Airtel will emerge stronger on continued market share gains," it added.
It seems that the court could ask for some upfront payment to allow staggered payment of the remaining AGR dues.
While Bharti Airtel is better placed to make AGR payments, Vodafone Idea (VIL) may also manage to survive if upfront payments are negligible and AGR payments are spread over 20 years. However, a large upfront payment or AGR dues spread only over 10 years will be a stretch.
"There is strong possibility of VIL to stay as a going concern if staggered payment of AGR dues is accepted and government/company take steps to ensure its viability," the report said.
The Supreme Court gave DoT time till third week of July to consider the proposals filed by telcos for payment of AGR dues. The court argued for a provision of down payment to avail staggered payments and directed telcos to submit financial statements of last 10 years in the next hearing.
Court will take up the matter of furnishing undertakings in the next hearing, as Vodafone Idea pleaded its inability to furnish bank guarantee or personal guarantee from directors for over Rs 500 billion balance dues.