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AGR Dues: A Wide Gap Between Government And Telecom Firms Assessment

Three of India’s four telecom operators said they have fully paid the outstanding statutory dues based on adjusted gross revenue after self-assessment. But that’s way short of what the government expects.

While one of the wireless operators is yet to pay, the four—Bharti Airtel Ltd., Vodafone Idea Ltd., Tata Teleservices Ltd., and Reliance Jio Infocomm Ltd.— have calculated a combined liability of Rs 36,929 crore based on self-assessment, according to their statements. But that’s just 35 percent of what the government expected.

The payouts come nearly five months after the Supreme Court ruled that India’s telecom operators will have to include non-core revenue to calculate levies. The verdict dealt a crippling blow to the bruised industry as it has to pay the government thousands of crores.

Bharti Airtel said it owes the government Rs 13,000 crore but have made an additional ad-hoc payment payment of Rs 5,000 crore to cover differences that may arise with the Department of Telecommunication.

Tata Teleservices too said it owed Rs 2,197 crore and has made an additional payment of Rs 2,000 crore. Vodafone Idea Ltd. has paid close to Rs 3,500 crore, while Reliance Jio Infocomm Ltd. has made a payment of Rs 195 crore, based on their own assessment.

Barring Reliance Jio, self-assessed AGR dues of the other three are lower than what the government calculated. The difference, according to ICICI Securities, Morgan Stanley, Kotak Securities and IIFL, could be on account of:

  • Accounting difference—cash versus accrual accounting used for certain items of income.
  • Disallowing deduction on absence of documents—these include interconnect usage charges payouts.
  • Computational differences—duplication, inclusion of prior demands, etc.

The telecom operators have yet to respond to BloombergQuint’s emailed queries.

Self-Assessment Lower Than Provisions

The amount calculated and notified by telecom operators is around 40 percent lower compared to the provisions made by them earlier. Bharti Airtel and Vodafone Idea have so far provided Rs 35,300 crore and Rs 44,150 crore, respectively, for AGR dues, but the self-assessed amount stands close to Rs 13,000 crore and Rs 21500 crore, respectively.

That, according to Morgan Stanley, was based on extrapolation of existing DoT demands and not necessarily on the merits of calculations.

Kotak Institutional Equities said the path forward could involve an independent audit by the Comptroller and Auditor General of India and/or one of the Big 4 auditing firms, assuming the Supreme Court sees the efforts of telecom companies as bona fide and allows reconciliation of dues. The operators would have been extra cautious in their math, given the Supreme Court’s tough stance on the matter, the brokerage said in a note.

The apex court on March 17 will hear modification pleas by the operators, seeking to negotiate payment timelines with the telecom department.

―Bloomberg Quint

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