No relief for telcos: Supreme Court upholds AGR dues payment
What's the story
The Supreme Court of India has rejected petitions from top telecom giants Bharti Airtel, Tata Teleservices, and Vodafone Idea (Vi). The companies had requested a waiver on interest, penalty, and interest on penalty related to their adjusted gross revenue (AGR) dues. The court called these petitions "misconceived." The ruling comes after Vodafone Idea sought relief amid its dire financial condition.
Equal treatment
Bharti Airtel's petition for equitable treatment
Bharti Airtel and its unit Bharti Hexacom have also sought relief on an "equitable basis." The company requested a waiver of ₹34,745 crore in dues on account of interest and penalties. It argued that the Supreme Court's earlier ruling on AGR (from September 1, 2020) had placed a huge financial burden across the telecom sector.
Level playing field
Concerns over unequal treatment
The joint petition of Bharti Airtel and Bharti Hexacom raised concerns about the unequal treatment of telecom service providers (TSPs) by the government. It contended that the disparity would violate Article 14 of the Constitution and compromise the sector's financial stability. The petition highlighted that all operators impacted by the 2020 verdict should be treated equally to ensure a level playing field.
Liability details
Detailed breakdown of Bharti Airtel's AGR liabilities
As per the petition, Bharti Airtel and Bharti Hexacom owe a principal AGR amount of ₹9,235 crore. However, including interest (₹21,850 crore), penalties (₹3,995 crore), and interest on penalties (₹8,900 crore), their total liability increases to ₹43,980 crore. The Department of Telecommunications (DoT) has pegged these dues at ₹38,397 crore as of March 31.
Financial strain
Vodafone Idea's AGR liabilities and potential impact
In its separate petition, Vodafone Idea has reported an AGR liability of ₹83,400 crore. This includes ₹12,797 crore in principal dues, ₹28,294 crore in interest, ₹6,012 crore in penalties, and ₹11,151 crore in interest on penalties. The company has warned that without relief from these dues, its survival is at risk, which could potentially affect around 200 million subscribers.
Awaiting reply
Government's response to AGR dues conversion request
Both Bharti Airtel and Vodafone Idea have highlighted that huge relief packages had already been given by the government after the AGR verdict. They have requested the court to direct the Center to act fairly and not impose punitive interest and penalties. Earlier, Airtel had written to the telecom department asking if it could convert its AGR dues into equity like Vodafone Idea. The government has yet not responded.
Consistent rulings
Supreme Court's stance on DoT's AGR calculations
The Supreme Court has repeatedly upheld the DoT's AGR calculations. In February, it rejected a batch of review petitions from telecom operators seeking correction of alleged errors in the DoT's assessments. A subsequent batch of curative petitions was also dismissed in September 2023, showing the court's firm stance on the matter.