Supreme Court rules against telcos: Will have to pay Centre Rs 92,000 cr; Airtel may end up paying over Rs 21,000 cr, Vodafone Rs 20,000 cr

The Supreme Court on Thursday allowed the Centre's plea to recover adjusted gross revenue (AGR) of about Rs 92,000 crore from telcos

FP Staff October 24, 2019 14:45:34 IST
Supreme Court rules against telcos: Will have to pay Centre Rs 92,000 cr; Airtel may end up paying over Rs 21,000 cr, Vodafone Rs 20,000 cr
  • Airtel might end up paying more than Rs 21,000 crore, Vodafone Rs 20,000 crore

  • The Supreme Court on Thursday allowed the Centre's plea to recover adjusted gross revenue (AGR) of about Rs 92,000 crore from telecom service providers

  • Bharti Airtel, Vodafone and state-owned MTNL and BSNL have pending licence fee outstanding of over Rs 92,000 crore till date, the Centre has told the Supreme Court

The Supreme Court has ruled that telcos will have to pay all penalties and interests to the government, in a setback to telecom service providers.

The apex court allowed the Centre's plea to recover adjusted gross revenue (AGR) of about Rs 92,000 crore from the service providers.

A three-judge bench,  headed by Justice Arun Mishra said telcos will have to pay all their dues. The  Department of Telecom's (DoT) total demand is around Rs 92,000 crore. Airtel might end up paying more than Rs 21,000 crore, Vodafone more than Rs 20,000 crore.

Supreme Court rules against telcos Will have to pay Centre Rs 92000 cr Airtel may end up paying over Rs 21000 cr Vodafone Rs 20000 cr

File image of the Supreme Court. PTI

"We have held that definition of AGR will prevail," the bench, also comprising Justices Vineet Saran and S Ravindra Bhat, said.

"We have allowed the appeal of Department of Telecom and dismissed that of licensees (telcos)," the top court said while reading the operative portion of the judgment," a PTI report said.

The apex court said it had rejected all other submissions of the telecom companies. It added that the service providers would have to pay penalties and interests to the DoT.

The bench made it clear that there would no further litigation on the issue and it would fix a time frame for calculation and payment of dues by the telecom companies.

Vodafone shares down 19%

After the Supreme Court ruling, shares of Vodafone were down nearly 19 percent to Rs 4.59 per share. Reacting to the news, shares of Airtel were down 9 percent to Rs 325.60, but later recovered and is now trading 3.19 percent higher at Rs 372.

Airtel, Vodafone dues

In July, the Centre had told the apex court that leading private telecom firms like Bharti Airtel, Vodafone and state-owned MTNL and BSNL have pending licence fee outstanding of over Rs 92,000 crore till date.

Bharti Airtel, Vodafone and state-owned MTNL and BSNL have pending licence fee outstanding of over Rs 92,000 crore till date, the Centre has told the Supreme Court.

In an affidavit filed in the top court, Department of Telecom (DoT) said that as per calculations, Airtel owes Rs 21,682.13 crore as licence fee to the government.

Dues from Vodafone totalled Rs 19,823.71 crore while Reliance Communications owed a total of Rs 16,456.47 crore, DoT said.

BSNL owed Rs 2,098.72 crore while MTNL owed Rs 2,537.48 crore, it said.

The total amount which has to be recovered from all the telecom firms accrues to Rs 92,641.61 crore as on date, it said.

New telecom policy and AGR

As per the New Telecom Policy, telecom licensees are required to share a percentage of their Adjusted Gross Revenue (AGR) with the government as annual License Fee (LF).

In addition, mobile telephone operators were also required to pay Spectrum Usage Charges (SUC) for the use of radio frequency spectrum allotted to them.

Telecom operators had moved the top court against the Telecom Disputes Settlement and Appellate Tribunal's (TDSAT) order which ruled that certain non-telecom revenues like rent, profit on sale of fixed assets, dividend and treasury income would be counted as adjusted gross revenue (AGR), on which licence fee would have to be paid to the government.

The TDSAT order had exempted a large number of streams from the definition of AGR, like capital receipts, bad debt, distribution margins to dealers, forex fluctuations, sale of scrap and waiver of late fee.

The telecom tribunal also said revenue from non-core sources such as rent, profit on sale of fixed assets, dividend, interest and miscellaneous income must be included while computing a carrier's AGR, dealing a setback to telecom operators who would have to shell out more towards licence and spectrum usage fees.

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