Supreme Court gives telecom companies 3 months time to clear AGR dues

Apex court had upheld government definition of AGR, said telcos must pay licence and fine applicable

The Supreme Court (SC) has given telecom companies three months to comply with its order, upholding the government’s definition of adjusted gross revenue (AGR) and asked them to file a compliance report after depositing the money.

The SC had on Thursday said there would be no extension of time from a time frame decided by it.

It had also said the telecom companies would have to pay the fine and penalties, apart from the AGR dues. The payout by telcos could rise to an estimated Rs 1.33 trillion once spectrum usage charges (SUC) linked to the AGR are taken into account.

While Bharti Airtel has pending licence fee dues of nearly Rs 21,700 crore, the dues of the combined entity of Vodafone Idea amount to nearly Rs 28,300 crore. Anil Ambani-led Reliance Communications, which is undergoing insolvency proceedings, has pending licence dues of nearly Rs 16,500 crore, according to an affidavit submitted by the DoT with the SC, in July.

The concept of the AGR came into being after the New Telecom Policy of 1999 suggested that telecom service providers could migrate from a regime of “fixed licence fee to a revenue-sharing fee model”. In addition, these telecom operators were also required to pay spectrum usage charges (SUC) for the use of radio frequency spectrum allotted to them.

This arrangement, however, ran into trouble after the telecom service providers challenged the very definition of AGR. In 2003, the Association of Basic Telecom Operators filed the first plea in the case when it approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) challenging the definition of AGR as decided by the then government. The telecom operators had then said that DoT should have determined the AGR and the extent of it based only on the recommendations of the Telecom Regulatory Authority of India (Trai).

The DoT had then included dividend income, interest income on short-term investment, discounts on calls, revenues from other activities separately licensed, and reimbursement under the Universal Service Fund under AGR. While hearing the telecom operators’ plea against the DoT definition of AGR, the TDSAT had sent the matter back to Trai and said not enough consultations were made.