When it comes to Bharti Airtel and your client, the markets are giving a massive thumbs up. What is your initial reaction to the crucial AGR verdict?
As far as the government was concerned, they were willing to give us 20 years; Vodafone asked for 15 but I think now there is finality and clarity. They have given us 10 years and 10% upfront payment. I am not sure about the interest part of it because I have not read the judgement yet. But luckily as far as Bharti and Jio are concerned, the issues that were raised by the court in respect of spectrum and whether spectrum can be security with the banks and whether it is property or not that of course impacted Jio the most and that matter will be now decided at the level of the NCLAT.
As far as Bharti is concerned, there were issues in respect of both Videocon as well as Aircel. Luckily, the court has not passed any orders and I think we have succeeded there and there were no demands raised by the government at any stage. But the court of course was looking at it and heard us fully. So we are happy about that.
By and large, each telco will have to decide on its own what is to be done. But of course the judgement is final and there can be no appeal. Review petitions on their own are seldom successful because unless there is some error in the face of a record, reviews are never granted.
Is your client Bharti Airtel happy with the verdict and does not see a need to go back to the Supreme Court seeking a review especially since it may not have to pay extra on Aircel and Videocon’s behalf?
I do not know whether he is happy or not, we do not discuss issues like this with the client. The client has to decide on its own in the context of its own financial position and in terms of its own projection whether they would like to file a review or not. But that is something for the client to decide. As and when they seek our opinion, we will give it. But at this point in time, without the client first wanting to go forward, there is nothing that I have to say.
What is this verdict going to mean going forward? As adjusted gross revenue (AGR) calculation goes, that has been a big problem and the big charge of the telecom companies was the way it is calculated, taking everything in account?
But that matter has already become final. That issue has already been decided by the court earlier. We were only talking about how much timeline is available and what the courts should do in terms of when to discharge those liabilities. The court has not reaffirmed that verdict stance. So, that is not an issue. I do not think this is going to be a relook at that unless of course at some stage some petitions are filed and the court looks at that again. But I doubt that very much.
Be that as it may, the more serious issue which we need to look at and which courts also need to look at is that a slump in the economy leads to default and when courts are looking at economic issues like the health of a sector, they have to be exceptionally careful in rendering their judgements because it can have disastrous consequences on not just the sector, but the economy itself. We have seen that in the 2G verdict because of the sensationalism. Of course, the media had an enormous role to play there and because of that, the court rendered the judgment and prior to that, the sector was in decline and we lost so many players.
Vodafone-Idea is in great difficulty and the kind of dues that they have to pay you know already. Vodafone has incurred billions of pounds of losses and at some stage, the courts have to be a little more careful before they render their judgments and that is exactly what we try to impress upon this bench. When the bench said that spectrum is property and it belongs to the public and therefore prima facie, it cannot be held as security with the banks. Now there would be no lending by the banks to the telecom sector if spectrum is not security, because that is the only valuable asset that a bank would have in order to lend money to the sector. Luckily the court has not decided on that issue because it would have had enormous economic consequences and that issue then will be decided now by NCLAT.
In light of that when you are talking about how the court needs to be more cognisant and even show empathy for large economic participants. Paying AGR dues is going to be a big challenge, particularly for Vodafone Idea. The stock is down almost 20% in trade?
Yes, yes, this is always a problem because what happens is that, in the context of Covid and pre Covid, if the economy is on a decline and the cost of capital is very high and the returns are low, naturally the telecom sector or any other sector would go under.
There needs to be a more constructive policy framework within which sectors should be dealt with separately because not all sectors are impacted. For example, the construction sector is hugely impacted. It slumped by 60.3% in the quarter April-June. Other sectors like telecom have also been very badly affected.
The government must come up with constructive policies to ensure that the growth in the economy is sustained but unfortunately that is not being done.