SC Adjourns Hearing in Airtel, Vi's plea on Recomputation of AGR Dues

The Hon'ble Supreme Court of India has adjourned hearing of the recomputation plea filed by Bharti Airtel and Vodafone Idea on Tuesday. The plea comes in the ongoing AGR Dues case in the apex court. The hearing was scheduled at 10:30 AM yesterday, but the bench is examining the Maratha reservation case currently.

The two of the largest telcos have cited multiple issues in the calculation. These include arithmetic errors, double counting of revenue, inadmissible deductions and unaccounted payments.

AGR Dues Case: 20+ Years of Legal Battle

The AGR Dues case dates back to 1999. DoT issued notices to telecom companies seeking AGR dues. However, there was a dispute regarding the definition of AGR. In short, according to DoT, AGR included all revenues of a company. These revenues were to include streams from both telecom and non-telecom operation. However, telecos argued that AGR should include revenues from the core operations and not from any other revenue stream. They challenged this in various courts and forums before reaching out to SC. But the apex court sided with the government and exposed the telcos to AGR dues over Rs. 1.19 Lakh Crore.

Who Owes How Much AGR Dues?

DoT estimated the total dues at Rs. 1.19 Lakh Crores. The total dues that were pending are:

• Bharti Airtel: Rs 43,989 Crore (paid Rs. 18,004 Crore)
• Vodafone Idea: Rs 58,254 Crore (paid Rs. 6,354 Crore)
• Tata Teleservices: Rs 16,798 Crore (paid Rs. 4,197 Crore)
• Reliance Jio: 194.7 crore (paid in full)

Also, DoT calculated the dues for telcos which are now bankrupt, which came out to be around Rs. 40,000 Crore. In such cases, Aircel dues stand at Rs 12,289 crore, Videocon's at Rs 1,376 and Reliance Communications at Rs 25,199 crore. The apex court has argued that since Aircel and Videocon had pacts and spectrum sharing with Airtel and RComm was absorbed by Reliance Jio, those two should be liable for their dues.

The telcos requested a 20-year window for repayment of the dues but this was denied in September as the apex court only allowed a 10-year payment cycle, with annual instalments.

What is AGR?

Earlier, telcos had to pay a fixed license fees to the government to continue operations. However, in 1999, the government and telcos shifted to the revenue sharing fee mechanism which is known as AGR. Telcos are supposed to pay a percentage of their AGR with the government.

What Next for Vodafone Idea and Airtel?

Both the telcos are quite cash strapped and are looking to raise funds. If the status quo remains, expect delays in 5G rollout and implementation. Or in even worse news for the two telcos, Reliance Jio beating them to the punch again.