AGR fallout: Telecom tariff may go up by 20-25%

Telecom tariffs may go up by 25 per cent, as operators try to recover the money they will pay out for settling the dues related to Adjusted Gross Revenue.  

The SC order directing the telecom companies to settle the pending AGR dues by March 17, puts further uncertainty on their operational sustainability, particularly for Vodafone Idea. The latter’s ability to pay an amount of over ₹55,000 crore by the stipulated date is uncertain given its current financial flexibility.

However, Airtel which needs to pay ₹35,500 crore may survive this as it had recently raised funds.

"We expect telecom tariffs to rise further by at least 20-25 per cent in the near to medium term to support the payments of such large dues to DoT, " said Suman Chowdhury, President of Ratings at Acuité Ratings & Research Limited.

According to analysts, the tariffs could increase further, if Vodafone Idea exits the sector leaving just two players in the market.

"If the telecom sector becomes a duopoly then tariffs could increase further as the surviving players will not have too much competition to face, " said an industry expert.