Supreme Court asks telcos to pay Rs 92,000 crore to govt

By Xite - October 25, 2019
The Supreme Court has asked the telcos to pay approx Rs 92,000 crore to the government as it ruled in favour of the Centre in the AGR issue. Telecom giants Bharti Airtel and Vodafone Idea have said th....

Ruling in favour of the government on the AGR (adjusted gross revenue) issue, the Supreme Court has asked the telcos to pay over Rs 92,000 crore to the Centre. A bench led by Justice Arun Mishra, A.A. Nazeer and M.R Shah, gave the ruling. The government and the telecom sector had been locked in a fight over the definition of AGR. According to the latter, the ailing sector had claimed that the AGR includes only license and spectrum fees.

The government, however, argued that AGR includes much else, which took the dues of the telecom sector to over Rs 92,000 crores. In 2015, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had ruled that apart from license fees and spectrum fees, it would also include rent, dividends and profits on the sale of assets. The TDSAT has excluded bad debt, forex fluctuations and sale of scrap from it.

Telcos speak

A Bharti Airtel spokesperson said that the company is ‘disappointed’ by the verdict. ‘The definition of AGR has been a long standing dispute between the DoT and the Telecom Service Providers (TSPs) dating to 2005. The issue of inclusion of revenue from non-telecom activities and interpretation of the heads included in the definition of AGR under the license conditions has been through several rounds of litigation, which have been in favour of the TSPs till now,’ Airtel said in an emailed statement.

‘The TSPs have invested billions of dollars in developing the telecom sector and providing world-class services to consumers. This decision has come at a time when the sector is facing severe financial stress and may further weaken the viability of the sector as a whole. Of the 15 old operators impacted by the order, only two private sector operators remain in service today. The Government must review the impact of this decision and find suitable ways to mitigate the financial burden on the already stressed industry,’ the company added.

Vodafone Idea echod Airtel’s comments. ‘Vodafone Idea is extremely disappointed by the Hon’ble Supreme Court judgment on the Adjusted Gross Revenue (AGR) case. The matter is 14 years old and pertains to the issue of whether revenue from other non-telecom related activities should be included in the AGR definition under the telecom licence conditions. The matter has already been through several rounds of litigation, which have been largely in favour of the operators until now,’ it said. 

The telco also said that it would study the ruling as soon as it is available. ‘Clearly this judgment has significantly damaging implications for India’s telecom industry, which is already reeling under huge financial stress and is left with only four operators. Significant investment of several billion dollars has been made in creating world class networks. Today’s order has huge impact on two private operators while most of the other impacted operators have exited the sector. We urgently request that the government engage on this matter in order to find ways to mitigate the financial stress for the industry,’ the company added.

  • Tags
  • AGR
  • Bharti Airtel
  • Vodafone Idea