AGR dues: Telcos get some relief as SC gives them 10 years to repay

In a substantial relief to telecom companies, a Supreme Court bench on Tuesday (September 1) gave them 10 years to repay Adjusted Gross Revenue (AGR) dues running into about ₹1.6 lakh crore.

The Department of Telecom had approached the apex court in March seeking permission to allow the telcos to pay outstanding AGR dues to the tune of ₹1.43 lakh crore in annual installments over a 20-year period.

Out of the ₹1.43 lakh outstanding dues, ₹38,959 crore are due from four companies which are under liquidation. Reliance Communication (R-Comm), which is one of the companies under insolvency, alone owes more than ₹25,000 crore out of the ₹38,959 crore due from the four bankrupt telcos.

While reducing the time period, the bench headed by Justice Arun Mishra directed that these firms will have to pay 10% of dues by 2021 due to Covid-19 and the rest can be paid in installments by March 31, 2031.

In the event of default, the company will be punishable for contempt of court, the bench said.

On whether spectrum can be sold by the telecom companies facing proceedings under the Insolvency and Bankruptcy Code (IBC), the bench asked the National Company Law Tribunal (NCLT) to decide if spectrum can be subject matter of the resolution process.

The top court had in October 2019 delivered the verdict on the AGR issue for calculating government dues of telecom companies, such as Vodafone Idea, Bharti Airtel and Tata Teleservices, as licence fee spectrum usage charges.

Later, the Department of Telecom had in March this year moved a plea seeking permission for staggered payment in a time period of nearly 20 years for the telecom companies.

On August 21, the top court had directed the DoT to apprise it of the basis of spectrum sharing done by telecom companies and how much the liability of the sharers was.

The top court asked the DoT secretary to file a specific affidavit informing it about who was using the spectrum from the date of grant of licence and from which date the respective sharing of spectrum has taken place.

The Centre had earlier told the top court there was a difference of opinion between two of its ministers (DOT and the Ministry of Corporate Affairs) on the issue of sale of spectrum.

Spectrum sale is crucial for banks that are financial creditors under IBC since the value of teclos under insolvency will reduce greatly without spectrum.

Jio had entered into spectrum-sharing agreement with R-Comm, while Aircel and Videocon had traded their spectrum to Airtel.