India bats for telecom firms in SC over payment of dues

A 20-year window should be given to telecom firms to pay their AGR (adjusted gross revenue) dues, the centre has argued in Supreme Court today, backing the loss-making telcos, which claimed they would go bankrupt if the top court order for immediate payment is enforced.

The government said it has examined the issue and have given "serious consideration" to the market economy of the sector.

"Any one major telecom operator being pushed into bankruptcy could have severe adverse impact," the government said. "Any immediate adverse impact on the functioning of telcos will hurt not just the economy, but also the interest or crores of consumers," it added. "The judgment of the Supreme Court has translated into huge amounts becoming payable.

It would have inevitable consequences that won't be in anyone's interest," the government said, pointing out that the telcos have already made part payments. The remaining dues, it said, will be protected by the levy of 8 per cent interest on staggered payments.

Debt-ridden telecom firms have partially paid the Rs 1.47 lakh crore they owe to the telecom ministry, after the Supreme Court accused their bosses of contempt and ordered them to appear in court.

In the hearing last month, the top court had ripped into the firms and the government over the unpaid dues. The court's wrath was magnified over the fact that it happened despite its order of October, when it upheld the telecom department's demand that wireless carriers pay Rs 92,000 crore, and gave telecom operators three months to clear the dues.

In January, it rejected the companies' appeal to review the decision. Today the government argued that in case of bankruptcy of a single telco, it will have an adverse impact on competition in the sector and the customers.

"Valuable spectrum will be locked… there will be adverse impact on direct and indirect employment, adverse impact on tax and non-tax revenue and adverse impact on FDI.

Telecom service providers pay the government 3-5 per cent of their AGR in spectrum usage charges and 8 per cent as licence fees. The firms have long argued that the AGR should comprise just revenue accrued from core services. The government says it should include all revenue.