AGR dues: SC rejects telcos' plea seeking corrections in dues
In a major blow to major Indian telecom players, the Supreme Court on Friday rejected the applications by Bharti Airtel, Vodafone Idea, and Tata Teleservices, seeking corrections in the calculation of the adjusted gross revenue (AGR) owed to the Centre. These telecom service providers currently owe Rs. 93,520 crore in AGR dues to the government, as per the Department of Telecommunications (DoT). Here's more.
Rejecting the telecom firms' plea, a Supreme Court bench led by Justice L Nageswara Rao stated, "All the miscellaneous applications are dismissed." To recall, in September 2020, the top court gave the telcos 10 years' time until 2031 to pay AGR-related dues—amounting to Rs. 93,520 crore—owed to the government. However, they were required to clear 10% of the outstanding amount by March 31, 2021.
Bharti Airtel owes over Rs. 43,000 crore in AGR dues to the government, while Vodafone Idea's dues amount to over Rs. 50,000 crore. In January 2021—citing errors in the calculation of outstanding AGR dues—the telcos moved the SC seeking directions to the Centre for recalculation of the dues. Vodafone Idea sought correction of "arithmetic errors," Bharti Airtel claimed "duplication, unaccounted payments, and disallowed deductions."
However, Vodafone Idea claims its AGR dues were Rs. 21,533 crore as per its self-assessment, while self-assessed dues of Bharti Airtel and Tata Teleservices were Rs. 13,003 crore and Rs. 2,197 crore, respectively. In their applications, they stated their self-assessed dues were way less than the amount demanded by the DoT. But the SC earlier rejected their self-assessments, ruling the DoT's calculations were final.
The dispute between the telecom companies and the Centre revolves mainly around the definition of the adjusted gross revenue. The telcos—which pay a percentage of their revenue to the government as license fee—contend that non-core businesses like income from the sale of handsets, termination fees, roaming charges, rent, etc. shouldn't be included in the AGR but only revenues from core businesses should be included.
The Supreme Court's latest verdict on the AGR dues is a major setback to Bharti Airtel and Vodafone Idea, especially for the latter. It will have a bigger impact on the heavily debt-ridden third-largest Indian telco—with a Rs. 1.8 lakh crore debt—at a time it's looking for investors to raise Rs. 25,000 crore of much-needed funds. It also raises questions on Vodafone Idea's survival.
