Supreme Court to hear curative pleas from telecom operators on AGR Dues

Supreme Court will consider curative petitions from Bharti Airtel and Vodafone Idea, among other telcos, in a closed session on Friday

The Supreme Court of India is set to consider curative petitions filed by major telecom operators, including Vodafone Idea and Bharti Airtel, on Friday, according to a report by NDTV Profit. These petitions seek a limited reconsideration of the court’s 2019 judgment that mandated the inclusion of non-core revenues in the calculation of Adjusted Gross Revenue (AGR) dues.

The petitions argue that the Department of Telecommunications (DoT) made significant errors in calculating the AGR dues, resulting in unjust penalties. The curative pleas will be examined by a three-judge bench led by Chief Justice of India, DY Chandrachud.

The hearing will not be open to the public, as it will take place in the chambers of the CJI at 1.30 pm.

Background on the AGR dues case

Adjusted Gross Revenue is the basis for revenue sharing between telecom operators and the government. It determines the licensing and spectrum usage fees that operators must pay. The primary contention has been over the definition of AGR.

Telecom companies argued that it should only include core telecom revenues. While the DoT insisted it should encompass all revenue, including from non-telecom services.

In October 2019, the Supreme Court ruled in favour of the DoT, ending a 14-year legal battle and significantly increasing the financial liabilities of telecom operators. The judgment led to massive dues, with Airtel and Vodafone Idea owing more than Rs 90,000 crore combined.

The judgment severely impacted the already struggling telecom industry. Both Vodafone Idea and Bharti Airtel filed curative petitions in September 2020, arguing that the DoT’s calculation of dues was flawed and that the penalties imposed were arbitrary. The Supreme Court, however, ruled that the dues must be paid over a 10-year period, with 10 per cent upfront by March 2021 and the remainder to be paid annually until 2031.

Ongoing AGR disputes

Despite the 2020 ruling, telecom companies continue to challenge the calculation of dues. Vodafone Idea has raised concerns about the financial burden, noting that the AGR demands exceeded the principal amount. Airtel and Vodafone Idea maintain that they acted in good faith while disputing the revenue definitions.

The DoT’s estimates of dues differ significantly from the telecom companies’ calculations, with Airtel and Vodafone Idea arguing that the actual amounts owed are much lower. The Supreme Court had previously dismissed pleas for corrections in the computation of dues, but the current curative petitions seek a final reconsideration on the matter.

The Supreme Court’s decision, following today’s hearing, on the curative petitions will have significant implications for the telecom sector, potentially influencing the financial health of the companies involved.