CARE downgrades rating on Vodafone Idea's loans in view of SC's AGR verdict

Mumbai: Vodafone Idea said on 30 October that CARE Ratings has downgraded its rating on ’long-term bank facilities’ and non-convertible debentures’, citing the recent court ruling on the AGR issue and extension of timelines with regard to sale of Indus Tower stake to Bharti lnfratel. The Supreme Court, last week, had upheld the government’s way of computing the telecom revenue, from which dues like licence fee and spectrum usage charges are derived, and as a result Vodafone-Idea, Bharti Airtel and other telecom operators may have to pay the government a whopping Rs 1.4 lakh crore after including penalty and interest components. According to the telecom department’s initial calculations, Vodafone Idea may have to pay about Rs 40,000 crore, while Bharti Airtel faces a liability of around Rs 42,000 crore (including licence fees and spectrum usage charges). [caption id=“attachment_3343176” align=“alignleft” width=“380”]  Representative Image. Reuters[/caption] In a regulatory filing on Wednesday, Vodafone Idea said, “It is hereby informed that Care Ratings Limited (CARE), has downgraded its rating on long-term bank facilities and non-convertible debentures as per the rating rationale uploaded on its website today (that is on 30.10.2019)”. VIL added: “As per the rating rationale published on the website, the downgrade…is on account of recent Supreme Court ruling dated 24 October, 2019 on the AGR (Adjusted Gross Revenue) matter and also extension of the Long Stop Date from 24 October, 2019 to December 24, 2019 for the sale of Indus Tower stake to Bharti lnfratel”. The credit rating has been revised to “credit Watch with negative implications” from previously “negative” on Long Term Bank Facilities and Non-Convertible Debentures, the filing added. Earlier on Wednesday Fitch Ratings placed Bharti Airtel Ltd on ‘rating watch negative’ over unpaid regulatory dues arising from a recent Supreme Court ruling. Fitch placed Bharti’s ‘BBB-’ Long-Term Foreign-Currency Issuer Default Rating (IDR) on Rating Watch Negative (RWN) as well as its and B(Netherlands) BV’s senior unsecured bonds and Network i2i’s subordinated perpetual bonds on RWN.