DoT to raise AGR demand on telcos post Supreme Court order

New Delhi, Oct 24 (SocialNews.XYZ) The Department of Telecom will ask telecom companies to comply with the Supreme Court order and pay the dues pending on account of the AGR definition case but will not go beyond that for the next six months as the telcos have been given that time period by the apex court.

The telecom operators had asked for a minimum of six months to pay their AGR dues.

The Supreme Court on Thursday upheld the definition of adjusted gross revenue (AGR) provided by the DoT, putting an end to a 14-year old legal battle between telecom operators and the government. This comes as a major blow for telecom operators as they will have to shell out a massive Rs 92,000 crore in past dues at a time when they are already grappling with debt pressure and shrinking revenues.

"Right now, our position is that we will be going along with the Supreme Court order and whatever time the Supreme Court has given to them -- six months -- that we will abide. But since our position, interpretation and calculation of AGR have been upheld by the court, we will ask them to comply with the orders of the court. If the Supreme Court has allowed them six months, we have to wait.

"Right now, we will tell them this much amount is due them and they should pay at the earliest. But we will not go beyond that during the six months period. We will comply with the six month time period. We are already raising the demand regularly. Every year, the telcos are told about the dues pending on them on account of AGR definition which they had not paid owing to the pending case at the Supreme Court. Now, the SC has come out with its order validating our interpretation of AGR. So they have to pay," an official source said.

On the issue of who will pay for those telcos who have closed operations, they said that for the companies which have straight away been closed and have become bankrupt, it will depend on the further orders of the National Company Law Tribunal.

But in case of mergers, the sources said, the anchor company will take responsibility of the dues of the companies who have merged with it. Like Telenor and Tata have merged with Airtel, so all the responsibility of Tata and Telenor will be borne by Airtel and likewise.

On one of the telcos mulling a review petition, the sources said they can explore legal channels but the DoT will raise the demand due on them. Airtel's dues amount to Rs 21,682 crore, Vodafone owes Rs 19,823 crore, RCom has Rs 16,456 crore (operation shut and at NCLT), Aircel has dues of Rs 7,852 crore (at NCLT and shut), Idea Cellular (erstwhile) at Rs 8,485 crore, MTNL has Rs 2,537 crore and BSNL Rs 2,098 crore. Tata group has Rs 9,987 crore as pending AGR dues.

In a filing in the Supreme Court in August, the DoT had asked telcos to pay up Rs 92,641 crore on account of license fees and spectrum usage charges (SUC), which are decided on the basis of AGR.

DoT had argued that a wider number of items - interest income, dividend, profits on the sale of assets, insurance claims and forex gains - should be included as components of AGR. Telcos argued that these do not come under AGR.

The Rs 92,641 crore includes Rs 23,189 crore as the disputed amount, Rs 41,650 crore of the levy of interest, Rs 10,923 crore as penalty, and Rs 16,878 crore as interest on penalty. Just about three years ago, the total dues were just Rs 29,474 crore. AGR is calculated on the basis of spectrum usage charges and licence fees payable by telecom companies. The telecom companies are liable to pay around 3-5 per cent of AGR as spectrum usage charges and 8 per cent of the AGR and licence fees.

The decision will have a far-reaching impact on the sector, which is already battling with prolonged tariff wars and high debt burden. The profitability of incumbents is seriously under duress. Airtel, for instance, posted net losses of Rs 2,392.2 crore in the quarter ended June 2019. Vodafone Idea recorded net loss of Rs 4,873.9 crore in the same quarter.

Source: IANS