The Supreme Court of India held the Department of Telecom (DoT)’s interpretation of “adjusted gross revenue” (AGR) issue. Following the order, the telcos are now staring at dues of an estimated ₹1.4 lakh crore, which needs to be paid to the government within three months. Most industry players and analysts have argued that the payout of the huge amount could be the final straw for the already distressed sector. As per the order, Telecom companies has to pay the shortfall in AGR for the past 14 years but also an interest on that amount along with penalty and interest on the penalty.
Airtel, Vodafone Idea, Tata Tele seek waiver of interest, penalty. Both Bharti Airtel and Vodafone Idea have filed separate petitions in the Supreme Court, seeking a review of its judgment on dues linked to adjusted gross revenue (AGR). The order, upholding the government’s definition of AGR, implied telcos, including those who’ve shut their operations or have sold to others, would need to pay dues estimated at Rs 1.47 trillion, including spectrum usage charges (SUC). Of this, Rs 92,641 crore is the total AGR dues including penalties and interest etc.
Tata Teleservices, which had announced merging its consumer mobile business with Bharti Airtel in October 2017, has also filed a review petition in the apex court on the AGR verdict. A top executive at the Cellular Operators Association of India (COAI) confirmed that Videocon Telecommunications, which has closed down operations, and Norway-based Telenor, which sold its assets in seven circles to Airtel before leaving India, too have filed similar petitions.
At least Bharti Airtel and Vodafone Idea have asked for a waiver of the interest and penalty, along with the interest on penalty imposed by the court on the AGR and SUC payments. They have not contested the balance licence fee payable by them. Their petition is silent on staggered payment of the dues, in a departure from the demand made by the industry earlier.
The apex court will now take a decision on whether to admit these petitions. A review petition can be filed within 30 days of the ruling, which, in this case, came on October 24.The telcos were directed by the court to pay the money within 90 days from the date of the order.
Only the licence fee (minus the interest and penalty), something that telcos are willing to pay, comes to merely Rs 23,188 crore out of the Rs 92,641-crore AGR dues. In effect, that translates into just 25 per cent of what the apex court has asked them to fork out on AGR. The SC had imposed an interest of Rs 41,650 crore, a penalty of Rs 10,923 crore and an interest on penalty of Rs 16,878 crore.
Indian telecom industry is running through a bumpy roads like, the total amount to the government is owed by about 15 operators. However, 10 of them have either closed operations or are undergoing insolvency proceedings in the last 14 years. They include Reliance Communications, Telenor, Tata Teleservices, Aircel and Videocon. Currently, the Indian telecom sector has four players — Bharti Airtel, Reliance Jio, Vodafone Idea and state-owned BSNL/MTNL (Bharat Sanchar Nigam Limited/Mahanagar Telephone Nigam Limited) — so the government is unlikely to recover the entire amount of dues owed to it. As per the order, Bharti Airtel and Vodafone Idea are the most affected by this order. While the total dues of Bharti Airtel are estimated to be about ₹42,000 crore, for Vodafone Idea the amount is around ₹40,000 crore.The two state-run firms BSNL and MTNL together owe a little less than ₹5,000 crore just as licence fees.
For Bharti Airtel, just the licence fee dues will mean a payout of Rs 5,528 crore against an AGR demand of Rs 21,682 crore. In the case of Vodafone Idea, the licence fee dues will amount to Rs 6,870 crore compared to the AGR demand of Rs 28,308 crore. Just the licence fee dues of the two telcos will come to around a third of what the government has announced in spectrum payment relief, calculations show. The Union Cabinet on Wednesday approved a two-year moratorium for paying spectrum installments, with the relief estimated at Rs 42,000 crore for three telcos—Bharti Airtel, Vodafone Idea and Reliance Jio.
In the case of the Tatas, whose acquisition of the telecom business by Bharti Airtel is still going through regulatory clearances, the licence fee balance comes to Rs 2,321 crore against an AGR demand of Rs 9,987 crore.
For Telenor, the licence fee dues are pegged at Rs 529 crore but under the SC order, the company needs to fork out Rs 1,950 crore. The SUC will mean another Rs 900 crore, according to estimates. Similarly, for Videocon, which closed business in 2017, the SC order would mean a payout of Rs 1,032 crore. But without the interest and penalty, the dues will be much lower at Rs 393 crore. Its SUC dues are estimated at Rs 300 crore.
Spokespersons of Bharti Airtel, TTSL and Vodafone India did not comment on the review petition. Questions sent to Telenor and Videocon did not elicit any response till the time of going to press. Recently, COAI had, in a letter to the Department of Telecommunications (DoT), sought removal of the interest, penalty and interest on penalty imposed on them on AGR and SUC. It had also asked for a 10-year staggered payment to pay its dues with a two-year moratorium on payments.
Reliance Jio, which hasn’t filed any review petition, had welcomed the SC order, while protesting against any relief to the telcos. According to Jio’s communication with the government authorities, both Bharti Airtel as well as Vodafone Idea have enough cash to pay their dues.