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AGR order: Telcos seek interest, penalty waiver, 10 years to pay principal

With the telecom sector staring at a massive Rs 1.4 trillion payout following a Supreme Court order, it asked the government not to press for AGR dispute payment in its entirety

Press Trust of India  |  New Delhi 

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Jolted by the ruling on statutory dues calculation, telecom have sent an SOS to the government seeking a waiver of interest and penalties on the unpaid amount, as well as staggering payment of principal licence fee over 10 years, sources said.

chairman Sunil Mittal and his brother Rajan Mittal had on Monday met Telecom Minister Ravi Shankar Prasad and Telecom Secretary Anshu Prakash in the aftermath of the October 24 order that accepted government's way of calculating revenues of the companies, based on which statutory dues to exchequer are calculated.

While an Airtel spokesperson stated that the company has "not submitted any request (in the aftermath of the court ruling) to the DoT. We shall be making a formal representation soon through the COAI," sources said an unsigned representation by one of the telcos has sought an array of reliefs including lowering of licence fee and spectrum usage charges.

early on Tuesday said its second-quarter earnings report has been deferred till November 14 as it sought clarity and "support" from the government on Rs 42,000-crore statutory dues it owes to the exchequer following the judgment.

Sources said the unsigned note seeks urgent relief measures from the government saying auditors will qualify accounts in the next 1-2 weeks in absence of relief.

With the telecom sector staring at a massive Rs 1.4 trillion payout following a Supreme Court order, it asked the government not to press for adjusted gross revenue (AGR) dispute payment in its entirety, sources said adding the note argues that it could not be the intent of the government to enrich itself by charging licence fee and SUC on non-licensed revenue or income.

In the worst-case scenario, it has requested the government to levy only the principal amount (without any interest or penalty) pertaining to only license fee (not spectrum usage charges) that should be allowed to be paid over period of 10 years without interest.

It also said that AGR for other telecom services that are fixed-line, national and international long distance attracts no SUC as AGR, since "no spectrum is used".

It questioned how SUC as AGR can, therefore, be charged for service which is not even telecom, and just where is the use of spectrum in the sale of an asset or receipt of interest or dividend.

Citing the recent SC ruling that had upheld the government's position on including revenue from non-telecommunication businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer, the note said it fails logic on how an operator can be charged for a revenue that it has not earned. It has also questioned just how the sale of a building, used car be subject to spectrum charges required to run telecom services.

It has also sought 2 years moratorium on spectrum payments beyond April 2020 till March 2022, to ease the cash flow pressures on the industry without compromising the net present value of spectrum dues to the Government. This will allow continuity of business investment in critical network deployment and purchase of additional spectrum, it has said.

Citing past position of the telecom regulator and tribunal on the AGR dispute, it said that the fact that state-owned telecom too were following the same principle as private telcos goes to show that there was no intent to deny the government of its dues or levies.

It has sought a reduction in license fee from 8 per cent to 3 per cent, and said that the balance 5 per cent representing USO contribution be waived off or suspended till the current unutilized fund of Rs 50,000 crore is used up.

SUC should also be reduced to one per cent on line with Trai recommendations. Given that the spectrum is now auctioned it has said there is no logic in charging SUC which was the case when it was administratively allocated.

GST credit should also be refunded or adjusted against government dues, it added.

First Published: Tue, October 29 2019. 19:55 IST
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