"Both Bharti and VIL (Vodafone Idea Ltd) indicated that they are exploring filing a curative petition in the SC, wherein it has to be proved that the decision would have a humanitarian impact and also severe repercussions on GDP, given the importance of the sectorhave been rarely accepted by the SC," a Motilal Oswal note said.
Besides, other non-telecom public sector undertakings (PSUs) have liabilities of over Rs 3 trillion "the payment for which is still questionable - and they may have to file a review petition", it added
The brokerage said that it won't be surprising if the government comes to the rescue of the telecom sector. This is particularly because it has to recover Rs 900 billion as deferred spectrum debt from VIL, which has said it will be forced to shut operations if asked to pay the entire adjusted gross revenue (AGR) liability.
Also, VIL owes Rs 300 billion to banks. Against this, the Aditya Birla Group and Vodafone Plc's stake in VIL stands at a mere Rs 70 billion and Rs 80 billion, respectively.
"Moreover, the implication on end-customer in the advent of VIL shutdown could be terrible. In such a scenario, we believe that the government may look to exercise other options, including it may provide an AGR liability extension or moratorium on the same lines as spectrum payment liability to resolve near-term cash flow issues," the note said.
According to the note, the Department of telecom (DoT) could consider waiving off penalties and interest on penalties before 2011 since first decision of the apex court on AGR liability came in 2011. In such case, 40 per cent of the AGR payments could go off.
This, however, will be in contrast to the government's statement in Parliament that it will not provide any relief toward AGR liabilities.
Motilal Oswal said that GST input credit of Rs 80 billion and Rs 90 billion for Bharti and VIL, respectively are also being explored, but it could be a long-drawn process given the need for the GST Council's nod.
Telecom regulator TRAI and the DoT are deliberating a reduction in the license and spectrum usage charge (SUC), which could offer another Rs 30-40 billion each for Bharti and VIL.
"Instead of a single mega relief package, measures could be announced in tranches, in our view," the note said.
In a big blow to the telecom sector, the apex court on Thursday dismissed the review petition filed by telecom companies to grant a relief on their AGR liabilities, which have to be paid before the deadline of January 24, 2020.
"We note that telcos owe Rs 920 billion in AGR dues to the government, primarily Bharti (Rs 343 billion ) and VIL (Rs 443 billion). The verdict may put a severe burden on telcos and have unconceivable repercussions, particularly against the backdrop of VIL facing a risk of shutdown (it may result in Rs 1 .2 trillion debt default, large-scale job losses and subscriber churn)," Motilal Oswal said.
"We thus believe that the final outcome may not be linear and that there could be a payment extension or moratorium to say the least. Irrespective of the outcome, Bharti is well prepared and, along with RJio, appears poised for strong market share gains," it added.
( With inputs from IANS )