Sunil Mittal, K M Birla meet FM on telecom crisis as AGR deadline closes in

Almost three weeks after the Union Budget, two top representatives of India Inc visited the North Block office of Finance Minister Nirmala Sitharaman on Wednesday. Bharti Airtel chairman Sunil Mittal and Vodafone Idea chairman Kumar Mangalam Birla were not there to talk about issues related to the Budget, but to seek relief for the deeply stressed telecom sector.

For Birla, this was the second straight day of reaching out to the government. On Tuesday, he along with Vodafone Idea CEO Ravinder Takkar had met top officials of the Department of Telecommunications (DoT), including secretary Anshu Prakash, seeking relief from coercive action if the company failed to pay up the dues linked to adjusted gross revenue (AGR).

After meeting the FM on Wednesday, Mittal told reporters that the AGR issue was not discussed. He said the telecom sector was under stress for the last three-and-a-half years and that the government should focus on its sustainability.

“The only thing the government needs to do is to focus on how to ensure sustainability of the sector,” Mittal said. He also met the telecom secretary on Wednesday.

Mittal said Bharti Airtel had already announced plans to pay the dues arising from the Supreme Court ruling and was currently calculating its liability. The company has paid Rs 10,000 crore out of its estimated liability of Rs 35,500 crore. Vodafone Idea, which has maintained that it would be tough to continue as a going concern, has paid Rs 2,500 crore and has committed to pay another Rs 1,000 crore this week. Vodafone Idea’s AGR dues work out to more than Rs 50,000 crore.

It is learnt that the two telcos have proposed a few options to the Union government for consideration. This includes creating a telecom fund to give soft loans to the service providers and extending the payment timeline. A relaxed AGR law was also suggested to bring some relief in the sector.

SC on Monday had dismissed Vodafone Idea’s petition seeking relief from invocation of bank guarantee by DoT in case it failed to pay its AGR dues in the stipulated time. According to the unified licence agreement, the licensor or DoT can invoke bank guarantees and convert the same into cash security if the service provider violates any term of the licence.

On February 14, SC had rejected the modification applications of Bharti Airtel and Vodafone Idea seeking relaxed payment scheme for the AGR dues. The apex court directed the companies to make payments immediately. The issue dates back to 2003 when the AGR dispute had started. On October 24, 2019, the SC ruled that AGR for telcos should include all revenues accrued to carriers, including that from non-core activities, upholding the DoT's stance.