Promoters and parents of incumbents need to infuse equity

The Supreme Court's recent judgement on Adjusted Gross Revenue (AGR) case has huge ramifications on the well-being of two of the three largest telecom operators in India: Bharti Airtel and Vodafone Idea. The apex court rejected the definition of AGR used by the companies and agreed to the government’s computation. As a result, these companies are liable to pay Rs 21,700 crore and Rs 28,300 crore, respectively, to the exchequer. Given the state of their finances and indebtedness, it is clear that their promoters/parents should infuse money.

These liabilities put further pressure on both companies, especially Vodafone Idea, which is already under so much of stress. While the companies have appealed to the government for a rethink, the fact remains that both companies are mired in a mess. Remember that both companies are already carrying on their book – close to Rs 1.25 lakh crore each as on March 2019. Now, the moot question is how much money their promoters/parent firms can bring 

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