Supreme Court to decide on telcos’ AGR dues today

A three-judge Supreme Court bench, headed by Justice Arun Mishra, will pronounce its judgment on Tuesday whether to allow telecom companies to make staggered payment of their adjusted gross revenue (AGR) dues.

Big telcos, including Vodafone-Idea and Bharti Airtel, owe substantial amounts to the Department of Telecom (DoT).

The total liability on Vodafone-Idea is Rs 58,254 crore out of which it has paid more than Rs 7,000 crore. Similarly, Bharti Airtel had a liability of Rs 43,980 crore, out of which it has cleared more than Rs 18,000 crore. It is yet to pay Rs 25,976 crore.

The Supreme Court in its judgment on October 24, 2019, had upheld the interpretation given to the definition of AGR by the DoT and included revenues from various heads for calculation of the dues while imposing a cumulative burden of over 1.69 lakh crore on 16 telcos.

Review petitions against the judgment were dismissed on January 16.

Related news: SC raps DoT over demanding ₹3 lakh crore AGR dues from non telcos

The DoT 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.

The DoT said if as a result of the judgment, a major service providers faced proceedings under the insolvency and bankruptcy code, then the consumers would suffer because porting of mobile numbers from non-operational to operational service providers would take a long time leading to disruption of services.

It said competition in the telecom sector and quality of services would be impacted and would lead to loss of direct and indirect job losses. It would also impact foreign investment sentiment.

During the course of the hearing, telcos wanted 15 years to complete the payment.

The court had on July 20 reserved its order on whether to allow the prayer to make payment in installments.

The court later heard the matter separately with respect to the companies under liquidation and the recovery of amounts from them.

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

The court considered the question of whether spectrum could be sold or assigned under the Insolvency and Bankruptcy Code (IBC). The court had during the hearing expressed its reservations that subjecting spectrum to resolution process under IBC could result in government losing the dues.

The telcos have said that though they do not have ownership of spectrum, they can transfer the same under contract. Spectrum sale is crucial for banks that are financial creditors under IBC since the value of teclos under insolvency will reduce greatly without spectrum.

The court will consider whether spectrum-sharing agreements will cast additional obligation on Jio and Airtel. Jio had entered into spectrum-sharing agreement with R-Comm, while Aircel and Videocon had traded their spectrum to Airtel.

The judgment on this aspect was reserved on August 24.