The unified licence agreement states that the licensor or DoT can encash bank guarantees and convert them into a cash security if the service provider violates any term of the licence. Experts believe the paid up amount of telcos, especially that of Vodafone Idea, is just a drop in the ocean and would not serve the desired purpose.
Bank guarantees of 16 telcos listed in the SC order of October 24 work out to Rs 37,641 crore. Many of these companies
have either shut shop, sold their business or are in the bankruptcy court.
Bharti Airtel and Vodafone Idea
on Monday paid Rs 10,000 crore and Rs 2,500 crore, respectively, to the Union government as a portion of their AGR dues.
While Bharti has said it would make the remaining payment before March 17, Vodafone Idea
has told the authorities it would pay a second tranche of Rs 1,000 crore by February 21. In all, Bharti owes the government Rs 35,500 crore and Vodafone Idea around Rs 54,000 crore in AGR dues.
Tata Teleservices, which had sold its mobile business to Airtel, made a payment of Rs 2,197 crore to the government against estimated dues of around Rs 14,000 crore. However, sources close to the company said Tatas had made the full and final payment. Reliance Jio had already paid Rs 195 crore towards AGR dues.
With that, the government has so far got Rs 14,892 crore in AGR dues from telecom
companies, making up for just 10 per cent of the total outstanding amount.
Vodafone Idea, in a letter dated February 15 had informed the DoT that it had initiated the process of mobilising cash from all possible sources of the company, hoping to make the payment within days. On February 14, SC had rejected the modification applications of Bharti and Vodafone Idea seeking relaxed payment scheme for the AGR dues. The top court directed the companies to make payments immediately, prompting the DoT to issue letters to telcos last Friday that payments must be made by the same midnight.
Coming down heavily on the industry and the government, the court said the companies had violated the order and the case projected a very “disturbing scenario”.
“It appears the way in which things are happening that they have scant respect to the directions issued by this court,” SC said in its order. Soon after, the Union government issued fresh letters seeking full payment of dues from the companies.
Finance Minister Nirmala Sitharaman, in a post budget interaction with stakeholders said her ministry had been actively engaging with telecom
companies. The Reserve Bank of India was also monitoring the situation, she said.
Analysts said the SC order could have severe ramifications for the sector. “The impact of this could have serious repercussion on the telecom and banking sector in particular and the economy in general with large magnitude of debt default, job losses and customer annoyance as Vodafone Idea faces an imminent risk of shutdown,” Motilal Oswal research said.
SC, on October 24, 2019, ruled that AGR for telcos should include all revenue accrued to carriers, including that from non-core activities, backing the DoT's stance in a dispute running over 16 years.