Collateral damage? PSU majors stare at huge AGR bill after SC's judgment

Some of India’s top public-sector companies holding telecom service licences, which include GAIL India, Power Grid Corporation, Oil India, Delhi Metro, and RailTel, are seeking clarification from the Department of Telecom (DoT) as they may face a huge financial burden in the wake of the Supreme Court’s judgment on adjusted gross revenue (AGR).

Last month, the apex court ordered all telecom service operators to pay the past licence and spectrum dues in accordance with the annual AGR calculation formula used by the government.

While a section of the legal fraternity said these PSUs are among the 40 companies which would have to pay the past dues based on the SC order as it was applicable to all licence holders, officials at these PSUs dispute the figures. “As telecom is not our core business, we do not think we are impacted at all. But we will seek clarity from the government,” said an official.

The government has set up a committee of secretaries to look into all issues. Some of these PSUs are planning to seek clarity from the panel as well, said an official. 

A Gail official said it had received the ISP (internet service provider) licence in  2002 for 15 years, and it expired in 2017. “Gail India has not done any business based on this ISP licence and hence no amount is payable,” said the official. A RailTel official said the company was examining the judgment to assess the impact on the company. A Delhi Metro official said it was too early to comment of the issue.

“It is apparent from the definition of gross revenue that income from licensed activities and even from non­licensing activities and any other miscellaneous revenue of the licensee has to be included,” the Supreme Court had said in its order. 

This ruling would impact all DoT licensees which have revenues outside telecom and have to account for the revenues in AGR calculation, said a lawyer. 

Citing an example, the lawyer said GAIL’s liability for its licence period would come to Rs 23,378 crore — taking into account GAIL’s revenue for the relevant period. The interest and penalty will be added to the fees, the official said.

In the case of Power Grid, which was holding an ISP and National Long-Distance (NLD) licence, the dues will be Rs 10,344 crore. Oil India will have to pay an extra licence fee of Rs 4,854 crore, while DMRC will pay Rs 2,058 crore. 

RailTel, which is planning an initial public offer, will have to shell out Rs 135 crore. These figures do not include the interest and penalty on the fees. The industry was earlier expecting that the SC order dated October 24 will only hit telecom companies. 

According to the order, telecom companies have three months to pay the past spectrum usage charges and licence fees dues within three months. According to an affidavit submitted by the DoT with the SC in July this year, Bharti Airtel has pending licence fee dues of nearly Rs 21,700 crore. The dues of the combined entity of Vodafone Idea amount to Rs 28,300 crore. While Reliance Communications, which is undergoing insolvency proceedings, has pending licence dues of nearly Rs 16,500 crore, the Tata group company, Tata Teleservices, which has shut operations, has taken a fresh hit of Rs 9,987 crore.