AGR debate: Jio questions COAI letter to govt seeking relaxation for Airtel, Vodafone; says SC ruling must be implemented in entirety

The controversy over the Adjusted Gross Revenue (AGR) involving top telecos in the country intensified on Wednesday with Reliance Jio coming down heavily on the industry lobby, Cellular Operators Association of India (COAI), for writing to the government in favour of Airtel and Vodafone on the issue.

In a letter to the government on 29 October, COAI had said that the industry and leading players Bharti Airtel and Vodafone Idea will face an "unprecedented crisis" if the government doesn’t support the telecos, which have to pay Rs 92,000 crore dues post a crucial Supreme Court ruling. If the government doesn’t relax the payment requirements, it will lead to a crisis situation for the industry, the letter warned.

In a letter dated 30 October, Jio expressed displeasure over the contents of the letter and the hasty manner in which it was sent to the government by the COAI.

“This (COAI) letter does not represent the industry view by any stretch of imagination. We take strong umbrage at COAI exploiting the legitimate pay-out obligations to create an alarmist propaganda for the doom of telecom sector in the country. Actually, it appears that this sum was used for expanding some other business as per their commercial decisions (Sic),” Jio said in the letter.

Further, the letter highlighted that judgement of the Supreme Court (SC) is final and to be implemented as law of the land. These operators (Vodafone, Airtel) have the capacity and enough monetisation possibilities to comfortably pay government dues.

“We suggest that COAI, as an organisation supposedly representing all operators, should stop blaming Hon Supreme Court for their orders but ask members to respect judgement and stop forum shopping for relief,” the letter said.

Representational image. Reuters.

The debate on AGR has been going on for a while now but the issue gathered public attention when the SC upheld the government definition of AGR calculation has come as a double whammy.

As per the definition of AGR by the Department of Telecommunications (DoT) that has been upheld by the SC, the telecom companies will have to pay up around Rs 92,000 to the government in the next few months. Much of the hit will be Airtel and Vodafone compared with the competition.

AGR is the usage and licensing fee that telecom operators are charged by the government. This particular calculation has been a matter of controversy for long with both the telcos and DoT deferring on the particulars of the AGR.

The broader definition involved the revenue from even non-core activities including asset sales and interest accrued on deposits and so on. With the SC upholding the DoT’s version of AGR calculation, it would mean that the telcos will have to shell out about Rs 92,000 crore to comply with the DoT demand.

The SC held that not only the original dues, but even the principal interest and penalties on delayed payments would also be payable. But, the problem is not just about the definition of AGR. The government and judiciary seem to be convinced that the telecom companies have been underreporting revenue for long.

In 2017, government’s auditor, the Comptroller and Auditor General of India (CAG), had tabled a report in the Parliament that said six private telecom players understated their revenues by over Rs 61,000 crore, causing a loss of Rs 7,697.62 crore to the exchequer. The CAG also questioned the government for not taking adequate action on the companies for understating revenues.

(Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Firstpost)