The Supreme Court on Thursday heard the AGR matter related to a petition filed by the Department of Telecommunications (DoT) to allow telecom companies to make staggered payment over a period of 20 years of their remaining dues.

Here are the highlights from the hearing:

According to Rajiv Sharma of SBICAP Securities, the only option left for Vodafone Idea to pay the dues is a staggered payment over the period of 20 years. “They are rightly suggesting that there have been losses and they need more time and they need to protect market shares otherwise the rest two will be taking market shares so it is a 20 years' window that is the single possible solution here, anything lower looks difficult and personal guarantees where it seems the court is heading towards too - I think that will be very difficult to furnish from Vodafone perspective," said Sharma.

Reacting on today's AGR due hearing, telecom consultant Sanjay Kapoor said: “This is very much on the expected lines if you recall the last argument that happened, operators were pretty clear that they have made some submissions of the AGR dues which is on self-calculation and the balance that spectrum should be considered as security and their existing bank guarantee should be. So from their side, they will try ad justify that — now the matter is sub judice it will not be correct on my part to even utter a word but the courts have to see whether that is palatable.”

“As far as operators are concerned clearly the fact that they have listed companies and the structure of the companies is such that personal guarantees are not something that they will be in favour of and therefore they will try to justify their ground on these,” Kapoor added.

SC AGR dues order: Here are the main points

- We have considered the submissions made by telcos have sought more time.

-On the issue of furnishing undertaking, have deferred the hearing to third weekend July.

-DOT had sought time to consider the telcos proposals, will allow time till third week of July.

-SC directs for telcos to submit financial docs.

The hearing concludes.

Arvind Datar for Tata to SC: Consider it a joint submission from all telcos that bank guarantees would be unfeasible.

Furnishing of bank guarantees will have an adverse impact of further investments in the sector

Are being required to pay not just the principal, but interest and penalty.

Rohatgi for Vodafone to SC: We appreciate the suggestion from the court, allow us 2 weeks to confer with the management of the company and will get back.

SC observes: This is the only industry that has done business during the lockdown.

Should deposit a reasonable amount. It must make a payment, the government needs money for running the country, for public welfare.

SC observes: There has to be a provision for the down payment to avail of staggered payments. A need to show bonafide to claim benefits of staggered payment. Vodafone-Idea must work something out to come with some offer. A reasonable amount needs to be paid upfront. Not possible for us to pass orders without reasonable upfront payment.

Rohatgi for Vodafone Idea to SC: Dues claimed are over Rs 50,000 crore, how can I ask independent directors to furnish personal guarantees.

SC observes: All your assets are charged (Voda Idea), you say you are a foreign company, what if you walk away, leaving your assets here.

There has to be mutual trust.

What about personal guarantees by directors?

Rohatgi for Vodafone to SC: Assets are worth Rs 42, 000 crore, have been charged as securities to secure borrowing of over 1 lakh crores.

Rohatgi to SC: We'll deposit all documents to manifest that Voda is not making profits.

The ship is barely afloat, the only way to pay AGR dues is to stagger payments over 20 years.

Have to earn and pay, the only way.

SC observes — How has Vodafone made provisions of 52000cr of contingent liabilities if not making any money?

Rohatgi: Payment in installments is the only way.

Justice Mishra: Place on record your balance sheets and income tax returns.

Rohatgi: I can place all these documents.

Justice Shah: Place these contingent liabilities which are on your books of account.

Rohatgi: If I pay more, I will have nothing left. I have 11000 employees. Will not be able to pay them.

Meanwhile, at 12:07 pm, Vodafone Idea's shares slipped over a percent lower to Rs 9.70 on the NSE.

Rohatgi for Vodafone Idea to SC: I have no security or proposal to give. The only proposal is to work and pay the AGR dues. Have bank guarantees of Rs 15, 000 crore that can be considered as a security.

Meanwhile, you can also follow us on the thread below on twitter to get all the latest updates from the SC hearing on AGR case today

#AGR case hearing begins at Supreme Court pic.twitter.com/VbGfcmGeem

— CNBC-TV18 (@CNBCTV18Live) June 18, 2020

Mukul Rohatgi to SC: After servicing debt of 1 lakh crores, paying creditors, continue to make losses. I have no profit, for the past very many quarters. Most assets are given as securities to banks to secure credit.

Mukul Rohatgi appearing for Vodafone Idea to SC: Extremely precarious position for Vodafone Idea. We are not in a position to give any fresh bank guarantees. Our parent company has written off investment, my losses are over Rs 1 lakh guarantees. Over Rs 10,000 crore of bank guarantees are lying with the DoT, should be considered as security.

AM Singhvi to SC: Bank Guarantees of Rs 10, 800 crore is pending with the DoT. Can be encashed if Airtel defaults on payments.

AM Singhvi to SC: Bharti Airtel's payment of AGR dues constitutes 70 percent of the total amount collected so far by DOT.

In a lighter vein, Singhvi says - Judges are not maintaining social distancing.

He further adds, we have a spectrum of Rs 1.12 lakh crores, have licenses and bank guarantees which are far in excess of the demands made.

I endorse the suggestion by Solicitor General to consider our proposal.

Senior Advocate AM Singhvi who's appearing for Bharti Airtel tells the court: We have already paid Rs 18,000 crores out of over Rs 21,000 crores. According to me I have fully complied.

Solicitor General Mehta: We have received respective affidavits from Telcos. I have to take directions from the authorities accordingly. In response, Justice Misra says: Let us see what these are

Solicitor General Tushar Mehta: We have taken a decision since they are not in the business of providing telecom services to the general public, we are withdrawing the dues from these PSUs.

AGR dues case hearing begins as judges assemble.

Vodafone Idea's share price gained as much as 3.55 percent to Rs 10.20 apiece while Bharti Airtel rose a percent higher to Rs 569 on the NSE. At 11:30, Vodafone's shares trade 1 percent higher to Rs 9.95 while Airtel traded 0.46 percent higher to Rs 566.05.

Most brokerages expect Bharti Airtel to be in a strong position to furnish guarantees and maintain cash outflow for payments if a 20-year timeline isn't agreed to. SBI Caps Securities does not expect the Supreme Court to agree to a 20-year time frame.

The telecom operators have filed their affidavits regarding payment possibilities in the AGR dues case with the Supreme Court, according to people in the know. Read CNBC-TV18's Kritika Saxena's full report here

In the last hearing on June 11, the apex court came down heavily on telcos for not having paid the pending AGR dues. Full highlights of the hearing available here

First Published:Jun 18, 2020 11:24 AM IST