Telecom dept may send AGR demand letters to Airtel, Voda-Idea next week

The Department of Telecommunications (DoT) plans to send out letters to Bharti Airtel and Vodafone Idea, seeking payment of dues, if the industry’s modification plea on the adjusted gross revenue (AGR) issue is not taken up by the Supreme Court this week. The expectation is that at least the first tranche of the total estimated dues of Rs 1.47 trillion should be paid immediately, based on a self-assessment method.    

While the DoT had earlier said it would not take any coercive action if telcos missed the January 23 deadline as the SC had agreed to hear their application requesting for modification of the order, officials believe the time has come for the companies to start paying up the dues linked to AGR. “Companies cannot manipulate our order (on no coercive action) like this and not pay at all,” an official told Business Standard. The letters are expected to go out early next week.

In an order on October 24, 2019, the Supreme Court had upheld the DoT definition of AGR and had asked the telecom companies to pay up the licence fee dues and spectrum charges along with penalties and interest to the government within three months.

DoT doesn’t want the telcos’ payments to get delayed any further. 

In fact, the Budget has estimated revenues of Rs 1.33 trillion from telecommunications for the financial year 2020-21, while not specifying the source. 

While a finance ministry official, in a post-Budget interaction, had clarified that the expected revenue from telecom had not factored in the AGR dues, it may be challenging for the Centre to meet the telecom revenue target just from spectrum auction.      
In a tight spot
  • On Oct 24, SC rejected telco’s appeal against govt definition of adjusted gross revenue (AGR)
  • Telcos filed a modification plea in SC last month, seeking extension of Jan 23 deadline to pay AGR dues; the plea is yet to come up for hearing
  • AGR definition has been a long-standing issue between DoT, telcos
  • Cellular Operators Association of India says components of AGR which govt was trying to include were in contravention of the Telegraph Act and the recommendations of telecom regulator
The AGR-linked dues of Rs 1.47 trillion, as ordered by Supreme Court, have to be paid by 15 telecom companies, though many of them have sold out their business or shut down operations. Reliance Jio is the only telco to have paid up.  

In an interim relief to telcos, DoT had in a circular said on January 23 that  it would not take any “coercive” action against Bharti Airtel and Vodafone Idea when they failed to comply with the SC order on repayment of AGR dues. The circular from the Licensing Finance Policy Wing (LFPW) of the DoT was sent out to the Controller of Communications Accounts (CCA) in different circles that no “coercive action” must be taken against telecom operators.

The telecom operators had filed the modification plea in the Supreme Court in January, seeking an extension of the January 23 deadline to pay the dues.

Bharti Airtel and Vodafone Idea had informed the Union government that they would comply with the Supreme Court order on AGR dues, while stating that they would make the payment after their “modification” petition is heard by the court.

Earlier on January 16, a Bench headed by Justice Arun Mishra had rejected telcos’ review petitions in the AGR case.

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