SC ruling to have damaging implications for industry, may explore review application: Voda Idea

Telecom major Vodafone Idea Ltd (VIL) on Thursday warned that the latest verdict on definition of telecom revenue will have "damaging implications" for the industry, and indicated it could explore filing a review application after legal consultation.

Expressing disappointment over the SC ruling, Vodafone Idea also exhorted the government to engage on the matter to find ways to mitigate financial stress of the industry.

"We will study the ruling as soon as it is available, along with our legal advisers, to determine next steps. If there are technical or procedural grounds for doing so, this could include a Review Application," VIL said in a statement.

It said the judgment has "significantly damaging implications for India's telecom industry" that is already reeling under huge financial stress and is left with only four operators.

VIL said significant investment of several billion dollars has been made in creating world class networks.

"Today's order has huge impact on two private operators while most of the other impacted operators have exited the sector. We urgently request that the government engage on this matter in order to find ways to mitigate the financial stress for the industry, it said.

VIL noted that the matter is 14 years old and pertains to the issue of whether revenue from other non-telecom related activities should be included in the adjusted gross revenue (AGR) definition under the telecom licence conditions.

"The matter has already been through several rounds of litigation, which have been largely in favour of the operators until now," VIL added.

In a setback to telecom service providers, the Supreme Court on Thursday allowed the Centre's plea to recover AGR of about Rs 92,000 crore from them.

The apex court said it had rejected all other submissions of the telecom companies. It added that the service providers would have to pay penalties and interests to DoT.

The bench made it clear that there would be no further litigation on the issue and it would fix a time frame for calculation and payment of dues by telecom companies.

Dues from Vodafone are estimated to be Rs 19,823.71 crore.

Sunil Mittal-led Bharti Airtel has said the verdict on AGR will weaken viability of telecom sector, and the government must review its impact and find ways to mitigate financial burden on the already stressed industry.

Industry body COAI has said the ruling will deal a "disastrous blow" to the industry, given its precarious financial condition.