Home » Stand off between DOT and telecom operators over AGR continues

Stand off between DOT and telecom operators over AGR continues

by Raju Vernekar
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None of the telecom companies paid the adjusted gross revenue (AGR) as directed by the  Supreme Court, even as deadline to make payment of pending dues of Rs.1.47-lakh crore by over 15 companies expired on Thursday.
“ Bharti Airtel”, “ Vodafone Idea” and “Teleservices” have filed modification pleas in the court seeking negotiations and fixation of schedules for payment of statutory dues by the Department of Telecommunications (DoT), which has sought immediate payment of dues including licence fees and spectrum usage charges (SUC) calculated on the basis of AGR. The state-owned RailTel Corp also has filed a petition in the SC.
In response to the pleas filed by the telecom operators, the SC on Tuesday said that it will take up the modification petitions filed by Vodafone Idea, Bharti Airtel, and Tata Teleservices, on giving them more time to pay off AGR related dues. The matter was mentioned before a bench headed by Chief Justice SA Bobde, who said it will list the fresh pleas “sometime in next week” before the same bench which had heard the earlier petition in the case.
The telecom operators in their pleas requested for an open court hearing with regard to working out fresh schedule of payment of their dues. Responding to the request, the Chief Justice of India, said that “open court or in-chamber hearing will be decided by the bench concerned”.
Earlier on January 16, a bench comprising Justices Arun Mishra, S.Abdul Nazeer and M.R.Shah, had dismissed review petitions filed by these companies challenging SC’s order dated 24 October, 2019. Holding that interest and penalty have rightly been levied on the telecom companies, SC had specified that there should not be any further litigation on the matter.
As per the SC order of October 24, telecom operators were required to pay up their dues by January 23. For Bharti Airtel, dues are around Rs 35,586 crore (Rs 21,682 crore as license fee (LF) and Rs 13,904 crore as SUC) and for Vodafone Idea the dues amount to Rs 53,038 crore(Rs 28,309 crore in LF and Rs 24,730 crore in SUC). Tata Teleservices, which has sold its consumer mobility business to “Airtel”, faces dues of Rs.13,823 crore.
As per the affidavit filed earlier in the SC, by DOT, the amount is also due from:  Reliance Communications-Rs 16,456.47 crore, BSNL-Rs 2,098.72 crore, and MTNL-Rs 2,537.48 crore.
After the telecom sector was liberalised under the National Telecom Policy 1994, licenses were issued to companies in return for a fixed license fee. In 1999, the government
gave an option to the licensees to migrate to the revenue sharing fee model, under which the
they were required to share a percentage of their AGR with the government as LF and SUC. AGR is computed after allowing for certain deductions spelt out in these license agreements. The LF and SUC were set at 8 per cent and between 3-5 per cent of AGR respectively, based on the agreement.
However in 2005, the Cellular Operators Association of India (COAI) challenged the government’s definition for AGR calculation and in 2015 and the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) stayed the case in favour of telecom companies and held that AGR includes all receipts, except capital receipts and revenue from non-core sources such as rent, profit on the sale of fixed assets, dividend, interest and miscellaneous income. However on 24 October, 2019, SC set aside TDSAT’s order and upheld the definition of AGR as stipulated by the DoT.
In the meanwhile DOT has served notices to some of the non-telecom companies with telecom licences, including public sector units such as GAIL India, Power Grid Corp. of India Ltd (PGCIL) and Oil India Ltd (OIL)(Rs. Rs 48,000 crore), demanding nearly Rs 3 lakh crore. They are also likely to file separate review petitions. OIL uses an optic fibre network for internal communications.

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