Telecom majors seek more time from govt; may miss 23 January deadline to pay AGR dues to DoT

  • The Department of Telecommunications (DoT) had issued a notice to telecom operators to pay their adjusted gross revenue (AGR) dues within three months as directed by the Supreme Court

  • The three telecom firms—Vodafone Idea, Bharti Airtel and Tata Teleservices Ltd have jointly filed a modification application in the Supreme Court on Monday, seeking more time to pay the adjusted gross revenue (AGR) dues to the government

  • DoT estimates that telecom companies are required to jointly pay around Rs 1.47 lakh crore by 23 January

Telecom companies, including Vodafone Idea, Bharati Airtel and Tata Teleservices are likely to seek more time to pay the AGR dues to the government. Today (23 January) is the last day to make payments. The Department of Telecommunications (DoT) had issued a notice to telecom operators to pay their adjusted gross revenue (AGR) dues within three months as directed by the Supreme Court. The telecom majors are believed to have written to the Department of Telecommunications (DoT) seeking more time for making payments, according to news reports.

The three telecom firms—Vodafone Idea, Bharti Airtel and Tata Teleservices Ltd have jointly filed a modification application in the Supreme Court on Monday, seeking more time to pay the adjusted gross revenue (AGR) dues to the government, according to a report in Mint.

A modification petition can be heard in open court and the telecom companies are likely to argue for more time for making the payment to the telecom department.

On 16 January, the Supreme Court dismissed the plea of telecom majors, including Bharti Airtel and Vodafone Idea, seeking review of certain directions of the Supreme Court on recovery of past dues amounting to Rs 1.47 lakh crore from telecom service providers.

The recovery of past dues by the government was based on adjusted gross revenue of about Rs 92,000 crore.

The Supreme Court has upheld DoT method of calculating revenue share between telecom companies and the government in its order dated 24 October 2019. Based on this order, DoT estimates that telecom companies are required to jointly pay around Rs 1.47 lakh crore by 23 January. The DoT is learnt to have given no relaxation to the companies on the payment of AGR dues, a PTI report said.

 Telecom majors seek more time from govt; may miss 23 January deadline to pay AGR dues to DoT

Representative image. Reuters

As per DoT's estimate, the liability of Bharti Airtel Group is Rs 62,187.73 crore, Vodafone Idea Rs 54,183.9 crore and BSNL and MTNL Rs 10,675.18 crore. Companies under insolvency like Reliance Communications and Aircel have dues outstanding worth Rs 32,403.47 crore and companies under liquidation Rs 943 crore.

The DoT has given an option to telecom operators to clear all the dues on self-assessment within three months as per the Supreme Court order.

Tata Communications, which announced in third-quarter results on Wednesday (22 January) and in which the government holds 26.12 per stake, said it has made no provision for the telecom department's demand of Rs 6,633 crore for AGR dues as the Supreme Court order did not include appeal of the company which is still pending before the court.

Vodafone Idea Ltd, the worst-hit by the top court’s order on telecom dues, will await the hearing of its modification plea seeking easier payment terms before clearing dues to the government, a person aware of the development said to Mint.

Bharti Airtel and Vodafone Idea will have to pay the DoT 3-5 percent of their AGR in usage charges for spectrum, or airwaves, and 8 percent of AGR as licence fees. DoT and these companies have long had differences over the definition of AGR, according to a report in CNBC-TV18. The companies contend that AGR should comprise just revenue accrued from core services while DoT argues that AGR should include all revenue.

Following the 24 October Supreme Court order, the Department of Telecom (DoT) estimated that the total liability of 15 telecom companies, including penalties and interest, would be Rs 1.47 lakh crore.

As per DoT's estimate, the liability of Bharti Airtel is Rs 62,187.73 crore, Vodafone Idea Rs 54,183.9 crore and BSNL and MTNL Rs 10,675.18 crore. Companies under insolvency like Reliance Communications and Aircel have dues outstanding worth Rs 32,403.47 crore and companies under liquidation Rs 943 crore.

The Supreme Court on Tuesday agreed to list next week the fresh pleas of telecom firms, including Bharti Airtel, Vodafone Idea and Tata Teleservices, seeking a fresh schedule of payment of statutory dues to the tune of Rs 1.47 lakh crore to the Department of Telecommunications.

The telcos said they wanted an open court hearing on their fresh pleas with regard to working out a fresh schedule of payment of their dues.

The Supreme Court on 16 January dismissed review petitions of the telecom firms including Bharti Airtel and Vodafone Idea seeking review of its earlier order asking them to pay Rs 1.47 lakh crore in past statutory dues by 23 January saying it did not find any "justifiable reason" to entertain them.

Bharti Airtel, Vodafone Idea mull options

The apex court had on 24 October, ruled that the statutory dues need to be calculated by including non-telecom revenues in what is known as adjusted gross revenues (AGR) of telcos.

Meanwhile, Bharti Airtel and Vodafone Idea are evaluating filing a curative petition before the apex court for relaxation on penalties and payment deadline.

In a statement, Bharti Airtel said it was disappointed by the order and is now "evaluating filing a curative petition."

Vodafone Idea said it is also "exploring further options, including filing of a curative petition".

Bharti Airtel has raised capital to meet the liability, but Vodafone Idea remains challenged. Airtel last week raised capital of $3 billion, which should help it meet its AGR liability with the help of additional debt.

VIL promoters, Vodafone Plc and Aditya Birla Group, have already mentioned that if the entire AGR liability has to be paid, they will have to shut shop, IANS said.

"We don't see the situation for VIL being salvaged without government intervention. Apart from other stakeholders in VIL, the government too could be one of the most impacted parties if the company shuts down as it is owed Rs 900 billion in deferred spectrum dues, besides the AGR liability," ICICI Securities noted.

"We also see indirect impact on PSU banks if VIL fails to cough up the money", it noted.

No proposal to waive interest, penalties, says telecom minister

Telecom Minister Ravi Shankar Prasad had told Parliament in November that Bharti Airtel, Vodafone Idea and other telecom companies owe the government as much as Rs 1.47 lakh crore in past statutory dues.

He had added that there is no proposal at present to waive interest and penalties on such dues.

In replies to separate questions in the Lok Sabha, Prasad had said telecom companies owe the government Rs 92,642 crore in unpaid licence fee, and another Rs 55,054 crore in outstanding spectrum usage charges.

In an affidavit filed earlier in the top court, the DoT said Airtel owed Rs 21,682.13 crore as a licence fee to the government and dues from Vodafone totalled Rs 19,823.71 crore, while Reliance Communications owed Rs 16,456.47 crore. BSNL owed Rs 2,098.72 crore, and MTNL Rs 2,537.48 crore.

Holding that interest and penalty have rightly been levied on the telecom companies, the apex court had made it clear that there would be no further litigation on the issue and it would fix a time-frame for calculation and payment of dues by the telecom companies.

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Updated Date: Jan 23, 2020 08:01:36 IST