SC Allows Telecom Firms 10 Years For AGR Dues – Free PDF Download

• The Supreme Court Tuesday held that telecom firmswill get 10 years to clear their adjusted gross revenue or AGR dues.

Government Vs telecom operators

• The tussle started when telecom operators migrated to a new system offered by the government in 1999.
• This new system came to be known as revenue-sharing model.
• Under this, they agreed to share a certain percentage of revenue with the government as a spectrum & license fee.

adjusted gross revenue (AGR)

• The revenue from which telecom operators agreed to share with government is AGR.
• Initially, 15% AGR was fixed as licence fee under revenue-sharing model.
• This was reduced to 13% and then to 8% in 2013.

What is the main problem?

• The government and telecom operators differed on the definition of AGR.
• The Telcom operators contended that AGR should include only core telecom services.
• But the Centre’s contention was that AGR should also include deposit interests, handset sales, rent and profit from scrap sale.
• The telecom companies were opposed to this and had challenged this definition of AGR in several forums, including the Supreme Court.
• On October 24, 2019, the SC had upheld the DoT’s definition of AGR and said since the licensee had agreed to the migration packages,
• They were liable to pay the dues, the penalty on dues, and the interest on penalty due to delay in payments.
• The top court had then given the telcos three months to clear their AGR dues.

• BSNL- Rs 2,098.72 crore
• MTNL’s- Rs 2,537.48 crore

Will telecom operators be able to pay this?

Latest Supreme Court rule on AGR dues?

• In its judgment Tuesday, the top court gave all telcos a 10-year timeline to complete the payments of AGR dues, instead of the old 20-year schedule suggested by the DoT.
• The top court also directed telcos to pay 10 per cent of the total AGR dues by March 31, 2020, following which they can make payments in annual installments between 2021 and 2031.
• Telecom companies would also have to make payments on or before February 7 every year.
• The non-payment of dues in any year would lead to accrual of interest and invite contempt of court proceedings against such companies.

Why did the SC extend the payment term?

• Following requests by the DoT and the telecom companies that asking them to pay within such a short period of time could have meant the end of the road for them.
• The Supreme Court agreed to hear them on a revised timeline, but refused to reconsider the quantum of AGR to be paid by them.

What it means for Telecoms?

• For Bharti Airtel, which faced an AGR payment of Rs 36,000 crore, has already paid close to 40% or Rs 14,400 crore AGR dues until now.
• It still has to pay Rs 21,600 crore in total.
• For Vodafone Idea, which faces a payment of more than Rs 58,000 crore, the situation is grim as it has paid Rs 7850 crore AGR dues till date.
• Tata Teleservices, which had in 2017 sold its consumer mobility businesses to Bharti Airtel, will have to pay its AGR dues of Rs 14,819 crore.

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