Supreme Court Reserves Order in AGR Dues Case

The Supreme Court, on Monday, after hearing the AGR dues case, in which the telcos involved have asked for a reassessment, has reserved the verdict.

Vodafone Idea, along with Bharti Airtel and Tata Teleservices, appealed that DoT should recalculate for arithmetical errors in the AGR calculations. The SC heard the telcos' counsels and reserved the case for order.

What all did the Telcos Say in the AGR Dues Case?

The telcos have asked for permission to show the DoT that the latter has made 'arithmetical errors' while compiling the their AGR dues. The telcos also asserted that they were not asking for a revision of the original judgement of the apex court.

At the Monday's court hearing, Vodafone Idea, along with Bharti Airtel and Tata Teleservices, pointed to the errors made by DoT while calculating AGR dues. The telcos cited these errors as the reason behind such steep demands from the telecom department. Notably, these three had filed separate pleas in January to seek a modification in the order dated September 20, 2020. During those proceedings, the SC had pronounced the DoT calculations as final.

The three-judge bench, led by Justice LN Rao and comprising Justice Abdul Nazeer and Justice MR Shah, reserved its verdict. It observed that it was only looking at what was causing the reassessment to not proceed.

Senior Advocate Mukul Rohatgi, representing Vi, said, "all I am saying is that the liability is spread over 20 years, but there are some arithmetical entries. If I have paid Re one, only 50 paise is reflected. Some cheques are not reflected. We want to place these entries before DoT".

"We are not a fly-by-night operator. Let DoT see the errors. Let them see, if they agree, we will get some rebate". He added that the AGR amounts are "not cast in stone". He said that while several tribunals don’t have the power of review, they do have the power to correct arithmetical errors.

Vodafone Idea Facing Trouble without Favorable AGR Dues Case Verdict

Cash-strapped Vodafone Idea has linked its viability to reduction in its AGR dues, along with other factors. Right now, it has a debt of ₹1.8 lakh crore and a cash balance of ₹350 crore. At its fiscal Q4 earnings call, the telco said it expected some relief from the SC which will reduce its AGR dues to nearly half. However, the top court had held DoT’s AGR calculations final, discarding self-assessments, almost a year ago.

Back then, Vi had self-assessed its dues at ₹21,533 crore. Further, Airtel and Tata estimated their dues at ₹13,003 crore and ₹2,197 crore, respectively. The ruling left Vi facing dues of ₹58,400 crore, Airtel with ₹43,980 crore and Tata with ₹16,798 crore dues.

The telcos have paid some of the said dues. Of these, Vi has paid ₹7,854 crore, Airtel ₹18,003 crore and Tata Tele ₹4,197 crore. The apex court had directed the telcos to pay their dues by March 31, 2031, in 10 instalments.

Apart from Vi's counsel, Airtel's counsel Abhishek Manu Singhvi highlighted the duplication in DoT's calculations. He said, "purely by oversight, some payments, deductions are not taken into consideration by DoT. Now, I don’t want to pay thousands of crores due to these errors". Also, Tata's representative Arvind Datar, said that clerical errors are inevitable given the size of operations and sheer number of people involved. "Rectification is a matter of right in any assessment", he added.

On the other hand, solicitor general Tushar Mehta said that he had no instructions and would need two days since the Parliament was in session. He said that in response to the bench's request for government's response on the telco's appeals.

No reassessment could spell trouble for Vodafone Idea. The cash-strapped telco will have to pay around 60% of its 2022 cash EBITDA as AGR EMI, according to CLSA. This will surely drive the telco in a financial crisis. To counter that, Vi will need an ARPU of around ₹170, a figure 40% higher than Q4 FY21, or risk shutting down operations.