industry

Supreme Court expected to give judgement on critical AGR issue Thursday


NEW DELHI: The Supreme Court is expected to give its order on Thursday on issues around adjusted gross revenue (AGR), including its definition, with government demands of Rs 92,000 crore in license fees from telcos at stake.

The apex court reserved its order in August on the dispute over the definition of AGR, based on which both spectrum charges and licence fees are paid to the government. Department of Telecommunications (DoT) says AGR should include dividends, handset sales, rent and profit from the sale of scrap, apart from revenue from services. Telcos counter that AGR should be limited to core telecom services alone.

Operators currently calculate AGR on the basis of a telecom tribunal judgement in 2015, which includes some non-core elements. Accordingly, operators have paid up only what they estimated was due as licence fees and spectrum charges, and DoT continues to demand the remainder.

As per DoT, Bharti Airtel owes Rs 21,682.13 crore as licence fee – a percentage of AGR – to the government, Vodafone Idea owes Rs 19,823.71 crore while Reliance Communications owes a total of Rs 16,456.47 crore.

Any adverse order will pile further pressure on telcos, mainly Vodafone Idea and Bharti Airtel, who have been facing pressure on revenue and profitability due to ongoing competition in the industry since Reliance Jio‘s entry in September 2016. The sector is also reeling under debt of over Rs7 lakh crore, with both Airtel and Vodafone Idea running debt of around Rs1 lakh crore each.

But a lot of the DoT demand amounts are from telcos who have either exited India or have filed for bankruptcy.

In addition to license fees, mobile telephone operators are also required to pay spectrum usage charges (SUC) for the use of radio frequency spectrum allotted to them.

According to information with ET, carriers owe over Rs 41,000 crore as SUC – about 3% percentage of AGR – to the government.

Airtel could owe over Rs 22,940 crore, including interest and penalties, while the dues of the entity formed by the merger of Idea Cellular and Vodafone India come to over Rs 11,000 crore.





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