Airtel Asks Centre to Review Impact of Supreme Court Order on Telcos' Dues

Airtel said the government must review the impact of the apex court's order as the companies have invested billions and are currently facing severe financial pressure.

By Indo-Asian News Service | Updated: 24 October 2019 18:02 IST

Airtel Asks Centre to Review Impact of Supreme Court Order on Telcos' Dues

Highlights

Government must review the impact of the apex court's order: Airtel
We have invested billions, facing severe financial presssure, said Airtel
Government should find ways to mitigate financial burden, company said

Bharti Airtel and Vodafone Idea, among other telecom firms will now have to shell out huge past dues to the Department of Telecom (DoT) following a Supreme Court order on Thursday.

The Supreme Court ordered eight telecom companies including Bharti Airtel and Vodafone Idea to pay the DoT about Rs. 92,000 crores ($13 billion) of past dues including penalties and interest.

Airtel said the government must review the impact of the apex court's order as the companies have invested billions and are currently facing severe financial presssure.

"The government must review the impact of this decision and find suitable ways to mitigate the financial burden on the already stressed industry. We will be able to comment further only after reviewing the order in detail", an Airtel spokesperson said.

"We are disappointed by the verdict of the Supreme Court. The definition of AGR (adjusted gross revenue) has been a long standing dispute between the DoT and the telecom service providers (TSPs) dating to 2005. The issue of inclusion of revenue from non-telecom activities and interpretation of the heads included in the definition of AGR under the license conditions has been through several rounds of litigation, which have been in favour of the TSPs till now.

"The telecom service providers have invested billions of dollars in developing the telecom sector and providing world-class services to consumers. This decision has come at a time when the sector is facing severe financial stress and may further weaken the viability of the sector as a whole. Of the 15 old operators impacted by the order, only two private sector operators remain in service today", the statement added.

According to the DoT's calculation, Bharti Airtel owes around Rs. 23,000 crores as licence fee and penalties - a percentage of AGR - to the government, Vodafone Idea owes Rs. 19,823.71 crores, while Reliance Communications owes a total of Rs. 16,456.47 crores. Reliance Communications has shut operations and has since exited.

The dispute was on adjusted gross revenue (AGR), including its definition, with the government demand of Rs. 92,000 crores. The DoT has said that AGR should include dividends, handset sales, rent and profit from the sale of scrap, apart from revenue from services.

The companies counter that AGR should be limited to core telecom services alone. Currently, the government is entitled to get 8 percent of a telecom operator's AGR as licence fee.

Operators currently calculate the AGR on the basis of a telecom tribunal judgement in 2015, which includes some non-core elements. Operators have paid up only what they estimated was due as licence fees and spectrum charges, while DoT continues to demand the balance.

The sector is already under severe pressure due to cheap tariffs on data, free voice calls till this month by Reliance Jio and under debt on account of past spectrum dues.

The overall sectoral debt stands at Rs. 7.5 lakh crores. Airtel has a debt of Rs. 1.06 lakh crores and Vodafone Idea have a debt of Rs, 1.15 lakh crores.

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