AGR issue: Supreme Court made the right call

| Updated on June 12, 2020 Published on June 12, 2020

With all parties showing some flexibility, India’s telecom players can hope for better days ahead

The Supreme Court’s order asking telecom operators to provide details on staggered payment of Adjusted Gross Revenue dues, as proposed by the Department of Telecommunication, provides a ray of hope to incumbent mobile operators. The Court has asked operators to provide a timeline and securities they can offer as guarantees in case they are allowed more time to pay the dues. This is the first time the Court has indicated that it is prepared to soften its stance since it gave the verdict in October 2019. Bharti Airtel and Vodafone Idea, with the backing of the Centre, now have an opportunity to convince the Court why the issue of AGR payments staggered over 20 years — instead of footing the bill in one go — is not just about their own survival but also in the interest of having a robust communication infrastructure in the country. The apex court has also done well to clarify that its order on AGR payments was not applicable to non-telecom public sector undertakings. Non-telecom companies, including GAIL, Powergrid and Oil India, were asked by the Department of Telecom to pay nearly ₹4 lakh crore. The core business of these companies is not telecom, and their telecom network was primarily used for internal communications. These entities were not even part of the dispute brewing between telecom operators and the DoT since 2003. The DoT using the Supreme Court’s ruling on AGR to demand humongous dues from these non-telecom companies was clearly a case of misinterpretation and overreach. To avoid further complications, the DoT should quickly determine how much each telecom operator has to pay towards AGR dues. Bharti Airtel and Vodafone Idea have come out with their respective calculations on how much they have to pay. But this is nearly 50-70 per cent lower than the initial estimate made by the DoT. Telecom operators should not only disclose their calculations but also ready a payment schedule that is sincere, unlike previous attempts made to settle the AGR issue.

Telecom networks are at the heart of our digital future, and affordable services are a key factor to enable the democratisation of data. The ongoing global crisis due to the Covid-19 virus has only re-emphasised the importance of the Internet and communication networks. Therefore, it is important to ensure that all existing operators survive.

The Centre has rightly announced a ₹70,000-crore package for BSNL and MTNL, to keep the public sector firms floating. A similar package must be offered to save private operators struggling under a debt of over ₹4 lakh crore. In addition to the staggered AGR payments, this would be the perfect time to bring down levies and taxes on telecom companies as they currently pay nearly 30 per cent of their revenues to the Centre.

Published on June 12, 2020
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