AGR concerns: Vodafone Idea urges DoT to grant 15 years for paying dues; seeks tax refund, licence fee cut among measures to tide over crisis

Vodafone Idea, in a letter to the DoT, the finance ministry and NITI Ayog, said that a GST refund of Rs 8,000 crore can be adjusted against its AGR dues and the remaining amount can be paid in a span of over 15 years.

FP Staff February 27, 2020 11:37:43 IST
AGR concerns: Vodafone Idea urges DoT to grant 15 years for paying dues; seeks tax refund, licence fee cut among measures to tide over crisis
  • Vodafone Idea, in a letter to the DoT, the finance ministry and NITI Ayog, said that a GST refund of Rs 8,000 crore can be adjusted against its AGR dues

  • After paying Rs 3,500 crore last week in two installments, the telco now owes statutory dues of about Rs 53,000 crore to the DoT

  • On 17 February, the Supreme Court had rejected Vodafone's proposal to pay Rs 2,500 crore by the end of the day and Rs 1,000 crore by Friday against AGR dues

Amid reports that the government may not invoke Vodafone Idea's bank guarantees as of now to recover its AGR dues, the telco reportedly urged the government to provide 15 years time to pay the dues, said a news report

Apart from seeking 15 years to pay adjusted gross revenue (AGR) dues, Vodafone Idea also demanded tax refund, a cut in licence fees and spectrum usage charges (SUC), besides the establishment of a floor for tariffs among other measures to help the company overcome the crisis, said a report in The Economic Times.

Vodafone Idea, in a letter to the Department of Telecommunications (DoT), the finance ministry and NITI Ayog, said that a goods and services tax (GST) refund of Rs 8,000 crore can be adjusted against the telco's AGR dues and remaining amount can be paid in a span of over 15 years, the report said. Vodafone Idea also sought an initial moratorium of three years.

AGR concerns Vodafone Idea urges DoT to grant 15 years for paying dues seeks tax refund licence fee cut among measures to tide over crisis

Representational image. Reuters.

According to the DoT estimates, the telco now owes statutory dues of about Rs 53,000 crore. Last week, Vodafone Idea paid Rs 3,500 crore in two installments. However, the telco's own estimates peg the dues at around Rs 23,000 crore, of which Rs 7,000 crore is the principal amount.

The Digital Communications Commission, which has representatives from DoT, ministry of finance, ministry of electronics and information technology and NITI Aayog, is expected to hold a meeting after Vodafone Idea Chairman Kumar Mangalam Birla held a series of meetings with top government officials, said a report in Mint.

On 17 February, the Supreme Court had rejected Vodafone's proposal to pay Rs 2,500 crore by the end of the day and Rs 1,000 crore by Friday against AGR dues, while also refusing its plea that no coercive action be taken against it.

On 14 February, the top court had warned of contempt proceedings against top executives of Bharti Airtel, Vodafone-Idea and other telecom firms for failing to comply with its directive to pay an estimated Rs 1.47 lakh crore in past dues, and asked whether there was no law left in the country.

On 18 February, Birla had met Telecom Secretary Anshu Prakash as he looked for options to keep the company afloat. After the meeting, Birla did not divulge what was discussed. Instead, he said, "cannot say anything at the moment."

In December last year, Birla had said Vodafone Idea may have to shut down if there is no relief on statutory dues. "If we are not getting anything, then I think it is the end of the story for Vodafone Idea," Birla had said. "It does not make sense to put good money after bad... We will shut shop."

There were reports that the DoT — which early this month had drawn flak for ordering no coercive action even after telcos missed the 23 January payment deadline set by the Supreme Court — was mulling the option of encashing bank guarantees given by firms when they got telecom licences, as none of the telcos have paid the full amount.

Encashing of bank guarantees may sound the death knell for companies such as Vodafone Idea which has been struggling to garner the dues.

A financial bank guarantee is equal to two quarters of licence fee and other dues. This amount could be in the range of Rs 5,000 crore each for Airtel and Vodafone Idea.

--With PTI inputs

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