Telecom AGR Dues Case: The Story So Far

The Supreme Court today directed the telecom companies to file affidavits giving details about they will pay the Adjusted Gross Revenue (AGR)-related dues dues to the government. The road map would have to include a deadline by which the staggered payment would have to be made, along with submission of securities.

What exactly is AGR?

AGR is the basis on which the Department of Telecom calculates levies payable by operators. Basically, it is a metric calculated from a company's gross revenues and is used to determine the levy that be imposed on the teleincome.

The AGR issue is a 14-year-old case that had mobile operators locked in a legal battle with the government over the definition of of the term. While the telecom providers insisted that AGR should only include revenue from core operations and that other sources should be excluded, the Department of Telecom (DoT) maintained that AGR also embraced non-core revenue from the sale of assets, interest on deposits, rental income and such like.

Ending this legal tussle, the Supreme Court on October 24, last year rejected telcos' definition of adjusted gross revenue (AGR) and held that telecom service providers have to now pay fines and penalties on the unpaid fees, other than termination fee and roaming charges.

The apex court allowed the Centre to recover over Rs 92,000 crore from the already financially stressed telecom industry within three months. The order came as a major blow to the two incumbent operators, Vodafone Idea and Bharti Airtel, forcing them to hike tariffs.

In February, the Supreme Court slammed mobile carriers for non-payment of dues and threatened them with contempt proceedings if they didn’t pay up by March 17.

Today, the apex court had also come down heavily on the DoT for allowing companies to re-assess what they owed the government, and said its October 24, 2019 order on revenues for calculating dues was final.

How much do the telcos owe?

Bharti Airtel's total due is at Rs 43,980 crore. The company has paid Rs 18,004 crore so far; the balance to be paid is Rs 25,976 crore. Vodafone Idea's dues are at Rs 58,254 crore. The company has paid Rs 6,354 crore; the balance left Rs 51,400 crore.Tata Group dues for Tata Telecom Services Ltd (TTSL) are pegged at Rs 16,798 crore. It has paid Rs 4,197 crore; balance is Rs 12,601 crore

Now, the two companies- Bharti Airtel and Vodafone Idea, sought some time to make the balance AGR payments, agreeing to have their licences cancelled in case they failed to meet the deadline. Justice Mishra sais the court can't grant an extension based on a 'gentleman's promise'. Vodafone Idea pleaded that it does not have enough money to pay and should be given some time. It added that its licence could be cancelled if it failed to pay up.

Listen to the podcast for more