SC Instructs Vodafone Idea, Airtel, Other Telcos To Pay Rs 92,000 Crore Dues To Government

25 Oct 2019 12:09 PM GMT
SC Instructs Vodafone Idea, Airtel, Other Telcos To Pay Rs 92,000 Crore Dues To Government

The Supreme Court on Thursday ordered the telecom service providers, including Bharti Airtel and Vodafone Idea, to pay the government as much as Rs 92,000 crore in dues, which includes penalties and interest. The top court rejected the definition of adjusted gross revenue (AGR) given by the telecom operators that excluded revenue from non-core telecom operations such as rent, dividend and interest income.

This marked the end of a 14-year-long legal dispute between the Department of Telecommunications (DoT) and operators when the telecom operators migrated to a new system offered by the government in 1999 under which they agreed to share a certain percentage of revenue with the government.

Telcos will now have to pay the pending dues to the government that have accrued over these years. Among the companies, Bharti Airtel Ltd and Vodafone Idea Ltd will be the worst affected reported Economic Times.

Telecom operators pay around 3-5 percent and 8 per cent of AGR as spectrum usage charges and licence fees, respectively, to the DoT. Operators had argued that AGR should comprise revenue from telecom services, but DoT insisted that it should include all revenue earned by an operator.

Telecom operators have asked for a minimum of six months to make the payment, which the bench said it would consider.

Expressing disappointment over the verdict, Vodafone Idea has issued a statement. “Judgement has significantly damaging implications for India’s telecom industry, which is already reeling under huge financial stress and is left with only four operators. A significant investment of several billion dollars has been made in creating world-class networks. Today’s order has a huge impact on two private operators, while most of the other impacted operators have exited the sector. We urgently request that the government engage in this matter in order to find ways to mitigate the financial stress for the industry.”

Airtel also expressed its disappointment with the verdict and stated, “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.”

DoT, in an affidavit filed in the Supreme Court, had listed the revenue owed by the different operators to it. According to the calculations, Bharti Airtel will have to pay an estimated Rs 21,682.13 crores, Vodafone idea will have to pay roughly Rs 28,308 crores. For Reliance Jio, the amount will be Rs 13 crores as it entered the sector only three years ago. BSNL and MTNL owed Rs 2,098.72 crores and Rs 2,537.48 crores respectively.

These figures will be recalculated in line with the definition of AGR mentioned in the judgement of the Supreme Court and will also include interest, penalty and interest on penalty and liabilities of the telecom service providers.

Rajan S. Mathews, director-general of Cellular Operators Association Of India (COAI), said: “The telecom sector expresses its deep disappointment on the Hon’ble Supreme Court’s judgement on the definition of Adjusted Gross Revenue (AGR) which will have an impact of over Rs 92,000 crores on the industry. The sector is already reeling under a daunting debt of approx. Rs 4 trillion and is in dire financial straits as operators are making negative returns on their investments. The Supreme Court’s judgement is the last straw in contributing to financial distress and it remains to be seen whether the industry will be able to recover from this setback.”


Also Read: BSNL, MTNL To Be Merged, Government’s ₹56,000 Crores Revival Plan For Ailing Companies

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