SC asks telcos to clear dues of ₹92,000 crore
Airtel owes ₹21,682 cr, while Vodafone owes ₹19,823 cr to the govt
NEW DELHI: Telecommunication companies such as Bharti Airtel and Vodafone Idea will need to pay the government thousands of crores in dues, the Supreme Court said on Thursday, deciding a dispute over how revenues are calculated in favour of the government which has sought as much as ₹92,000 crore from these firms.
The order deals a blow to businesses already struggling to make profits and pare debt, with Airtel saying it was “disappointed” by the verdict.
In an affidavit filed in the top court, the department of telecom (DoT) has said that as per calculations, Airtel owed ₹21,682.13 crore as licence fee to the government.
Dues from Vodafone came to ₹19,823.71 crore, while now-defunct Reliance Communications owed a total of ₹16,456.47 crore. State-run BSNL owed ₹2,098.72 crore, while MTNL ₹2,537.48 crore, it said.
The dispute goes back to 2005 and relates to how authorities calculate their annual adjusted gross revenue (AGR), a share of which is paid as license and spectrum fees.
The companies argue that AGR should comprise of just revenue accrued from core services, while DoT says AGR should include all revenue—including those from non-telecommunication services.
A three-judge bench, headed by Justice Arun Mishra, upheld the definition of adjusted gross revenue formulated by DoT. “We have held that the definition of AGR will prevail,” the bench, also comprising Justices SA Nazeer and MR Shah, said.
The apex court added that service providers would have to pay penalties and interests to DoT and that it would fix a time frame for calculation and payment of dues by the telecom companies.
The worst-hit are operators who have been in the business for more than 10 years, while it is far less consequential for Reliance Jio Infocomm Ltd, which entered in 2016 and triggered a bruising tariff war that has taken a toll on other players.
Airtel said the order could weaken the viability of the sector and urged the government to step in. “Telecom service providers have invested billions of dollars in developing the telecom sector and providing world-class services to consumers. This decision has come at a time when the sector is facing severe financial stress… Of the 15 old operators impacted by the order, only two private sector operators remain in service today,” the company said in a statement.
Shares of Vodafone Idea crashed over 27% during the day, before paring back some losses to close 23.36% down.
Bharti Airtel’s shares dived too, falling by 9.7% before it scripted a turnaround and closed 3.31% higher.
The Cellular Operators Association of India (COAI) said Thursday’s order was a “disastrous blow” for the industry. “This may well be the last straw that breaks the camel’s back, given the precarious financial position of operators,” COAI director general Rajan Mathews told IANS.
“Telecom sector is under immense financial stress admitted by all stakeholders. Further demand of ₹92,000 crore will dampen the sentiment of telecom operators and raising funds for broadband, network expansion and Digital India will hit a significant roadblock,” said Prashant Singhal, emerging markets, technology, media and telecom leader at EY, IANS reported.
With inputs from agencies.
THE DISPUTE GOES BACK TO 2005 AND RELATES TO HOW AUTHORITIES CALCULATE THEIR ANNUAL ADJUSTED GROSS REVENUE