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SC decision jolts telecom companies

The Supreme Court On Thursday Upheld The Definition Of Adjusted Gross Revenue (AGR) Provided By The Department Of Telecommunications (DoT), Putting An End To A 14-Year Old Legal Battle Between Telecom Operators And The Government.

This Comes As A Major Blow For Telecom Operators As They Will Have To Shell Out A Massive ₹92,000 Crore In Past Dues At A Time When They Are Already Grappling With Debt Pressure And Shrinking Revenues.

Telecom Operators Have Asked For A Minimum Of Six Months To Pay Their AGR Dues. The Apex Court Said It Will Consider Their Request.

What Should You Know About AGR?
AGR Is The Basis On Which DoT Calculates Levies Payable By Operators And It Has Been A Bone Of Contention In The Sector For Over A Decade. Telecom Operators Are Liable To Pay Around 3-5% And 8% Of The AGR As Spectrum Usage Charges And Licence Fees, Respectively, To DoT.

The Matter Has Been Under Litigation For 14 Years With Operators Arguing That AGR Should Comprise Revenue From Telecom Services, But DoT Insisting That AGR Should Include All Revenue Earned By An Operator, Including That From Non-Core Telecom Operations.

The battle started when telcos migrated to new system offered by the government in 1999 under which operators agreed to share certain percentage of revenue with the government.

The Case Has Seen Multiple Judgments By Telecom Tribunals And The Final Hearing By The Supreme Court Was Held On 1 August, 2019.

With The Government’s Win, Bharti Airtel Will Have To Pay ₹21,682 Crore And Vodafone Idea Will Have To Pay ₹28,308 Crore. For Jio, The Amount Is Just ₹13 Crore As It Entered The Sector Only Three Years Ago. This Amount Includes Interest, Penalty And Interest On Penalty Ballooning Liabilities.

Back In 2005, Telecom Industry Body Cellular Operators Association Of India Had Challenged The Definition Of AGR And Certain Components Included In AGR As Being Contrary To Telegraph Act And The Recommendations Made By The TRAI.

COAI had alleged that DoT unilaterally changed the earlier understanding of the definition of revenue share to include the revenue received by the licensees from their non-licensed activity.

While Shares Of Vodafone Idea Slumped 23.4% To End At ₹4.33, Those Of Bharti Airtel, Which Had Plunged Nearly 6% After The News, Recovered And Ended More Than 3% Higher At 372.45 Rupees.

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