A CASE THAT WASN’T

Why telcos were fighting a case that was always in DoT's favour

"IDON’TSEEANY POSITIVEIMPACT OFTHE GOVERNMENT’S MOVE. ITDOESN’T ADDRESS THE OPERATORS'KEY CONCERNS" MAHESH UPPAL

Director, ComFirst

As telecom companies explore legal remedies, including filing a review petition, there seems to be little hope for them in the apex court. A read through the 153-page judgement gives enough instances of how the court has justified the Department of Telecom’s (DoT's) demand. The case pertains to the definition of adjusted gross revenues (AGR). Back in 1999, the telecom operators felt they were paying through their nose to the government under the fixed licence system. So, the DoT devised a new package that gave telcos

the option to migrate to a revenue sharing system. The licence fee fell from 15 per cent of AGR to 13 per cent and then to 8 per cent in 2013.

In its October 24, 2019, order, the Supreme Court said that the telcos, in spite of the financial benefits of the package, started to ensure that they don’t pay the licence fee based on an agreed AGR, which included things such as installation charges, late fees, proceeds of handset sales, revenue on interest, dividend, and so on. The telecom regulator said that income from dividend, even though part of revenue, does not represent revenue from licenced activity, and ruled in favour of the telcos. But the Supreme Court later held that the TRAI and the telecom tribunal had no jurisdiction in this.

Experts say the telcos have themselves created the mess. “Despite fully knowing the terms of the revenue sharing model, they kept on arguing against the DoT’s demand in various legal forums over 13 long years. The telcos could have avoided such a big financial shock by regularly paying what was due. The actual disputed amount is only about 25 per cent of the total AGR dues; the rest is penalties and interest,” says a telecom consultant.