Uncertainty continues

Payment timeline for AGR dues would be critical

The Supreme Court has pronounced its order in the case dealing with the dues payable from the telecommunications sector to the government — known as adjusted gross revenue. The court has been quite harsh on the government for having raised a demand for dues against public-sector units such as Gas Authority of India Ltd. The court viewed that as going beyond what it had mandated, and asked the Department of Telecommunications (DoT) to clarify why it did so. This might turn out to be a little difficult for the government, as its lawyers had to concede that there were differences in the licences granted to public-sector undertakings and private-sector telecom players. On the crucial matter of whether companies such as Bharti Airtel and Vodafone Idea would be given the time required to pay — the Union government had decided on a 20-year repayment schedule — the court has asked the companies to explain what security they will provide and what the road map for their payments will be. 

The stability of the telecom sector, particularly at this time of crisis when an even larger proportion of Indians than normal depend upon it, is naturally paramount for the government. It is unfortunate, therefore, that it has allowed matters to reach such a pass that the court wants to demand such things as repayment schedules and guarantees from the companies. The government’s lawyers themselves seemed to think that this was an issue purely for the companies to provide security, when obviously the people of India as stakeholders in the sector should also have something to say about it. The court, in observing that nobody can predict the next 20 years and that “gentleman’s promise” cannot be a criterion for its judgment, is naturally correct. It is therefore understandable that it has asked the companies to file affidavits on timeframes. However, it is equally true that the Union government is best-placed to judge the risk and return in the national interest in this case, and that it had to be done in a transparent and uncontroversial manner.

The DoT now has an unenviable task in front of it. It must ensure that it manages to preserve stability in the telecom sector, and prevent it from becoming a monopoly — while also satisfying the court’s demands for a timeline for repayments. If 20 years does not meet with the court’s approval, it must find another timeframe that is both reasonable and acceptable. The court must also note that its observations that telecom companies are making profits and not contributing during the Covid-19 crisis are unfortunate. Companies should not feel that they need to contribute to the PM-CARES fund in the context of such statements from the Bench. The fact is that companies will have to pay up, but the schedule of such payments must be financially sustainable, and there must be a place for profit-making if the sector is to survive. The continued uncertainty in the sector will not help anyone. Clearly, the government could have handled the entire issue amicably without inviting the intervention of the judiciary. Now if one of the companies is unable to pay and is forced out of business, it would hurt both the government and consumers.