Telecom Firms Face Setback as Supreme Court Dismisses AGR Recalculation Petition
NEW DELHI (Economy India): In a major setback for telecom companies, the Supreme Court has dismissed the curative petition filed by Vodafone Idea, Bharti Airtel, and other telecom firms, which sought a recalculation of Adjusted Gross Revenue (AGR) dues. The court also rejected their plea for an open court hearing. This ruling confirms the court’s 2019 verdict that upheld the Department of Telecommunications’ (DoT) definition of AGR.
The AGR Dispute Explained
AGR (Adjusted Gross Revenue) is a mechanism for revenue sharing between the government and telecom operators. Telecom companies are required to pay a fixed licensing fee and spectrum usage charges to the DoT, which calculates these fees as a percentage of the AGR. However, the definition of AGR has been contentious for years.
Telecom operators argued that AGR should only include core telecom revenue, while the DoT maintained that it should also cover non-telecom revenues, such as income from rent, dividends, and interest. In October 2019, the Supreme Court ruled in favor of the DoT, stating that non-core revenue must be included in the AGR calculation. This ruling ended a 14-year legal battle between telecom companies and the government.
Massive Liability for Telecom Companies
The 2019 Supreme Court verdict resulted in massive financial burdens for telecom operators, with Bharti Airtel and Vodafone Idea facing dues of over ₹90,000 crore. After the ruling, the companies sought more time to pay their dues. In September 2020, the Supreme Court granted telecom operators 10 years to clear their outstanding amounts.
In 2021, however, the court dismissed another petition by the telecom companies, which had asked for permission to approach the DoT regarding errors in the calculation of AGR dues.
Government’s Stake in Vodafone Idea
As a result of the AGR ruling, the government initially held a 33% stake in Vodafone Idea, which has since reduced to 23%. The shares were allocated in exchange for converting outstanding interest dues arising from AGR and deferred spectrum auction payments.
Impact on Telecom Industry
The rejection of this latest plea confirms that telecom companies will have to follow the court’s 2019 order and pay their AGR dues as calculated by the DoT. This has placed further financial strain on an already struggling telecom sector, particularly affecting companies like Vodafone Idea and Bharti Airtel, which are facing massive dues.
With this ruling, the long-running AGR dispute seems to have reached its final legal conclusion, but the financial consequences will continue to weigh heavily on the telecom industry.
(Economy India)
Source: (PTI)
