AGR Dues: Telcos Dial SC Again, Seek Change In 90-Day Payment Deadline

Three telecom operators on Monday filed a “modification application” in the Supreme Court, seeking a change in the 90-day payment deadline for dues on account of adjusted gross revenue (AGR) as well as permission to engage with the Department of Telecommunications (DoT) on the terms and timing of payment.

Bharti Airtel, Vodafone Idea, and the Tata group, including Hughes Telecom (which was later named TTSL Maharashtra), have requested the apex court to list their petition for urgent hearing on Tuesday, because the deadline for them to pay Rs 1.47 trillion as AGR ends on January 24.

The court, on October 24 last year, had ordered telecom companies to pay their licence fees and spectrum user charges (SUCs) within 90 days. Failure to do so could lead to contempt of court.

Spokespersons for the three companies and groups did not respond or comment on the matter.

According to sources in the DoT, the department will not do anything that is against the order.

The plea, apart from holding off the telcos’ earlier plan to go for a curative petition, is aimed at not only getting more time to make the AGR payment but also, if the apex court allows, negotiate with the DoT for a staggered payment scheme, just as it was able to get while paying for spectrum.

In the case of spectrum, the DoT agreed to a staggered payment scheme for 16 years with a two-year moratorium and an upfront payment of 25 per cent to 35 per cent, depending on the spectrum band that a telco bought. Responding to the financial stress in the industry, especially in the case of Vodafone Idea, the government recently offered another two years’ moratorium from next financial year.

That would mean forgoing revenues of around Rs 50,000 crore temporarily for the next two financial years. However, failure to get relief would put the industry in major financial stress and, analysts say, could mean the end of the road for Vodafone Idea, which is highly leveraged and has made it clear that it will have no choice but to close down operations. The move, however, has hardly any impact on Reliance Jio, which has to fork out Rs 60 crore as AGR dues and, sources say, it is planning to pay the entire amount before the deadline. A query to Jio did not elicit any response.

Bharti Airtel, according to sources, will also have to pay Rs 2,100 crore arising out of dues on Telenor’s account (the firm merged with Bharti Airtel).

Sources said Sunil Mittal, chairman of Bharti Airtel, and Kumar Mangalam Birla, chairman of Vodafone Idea, were believed to have met Telecom Secretary Anshu Prakash on Saturday to discuss the dues and the way ahead for them.

Telecom companies are having discussions on a possible staggered payment plan. The Cellular Operators Association of India (COAI), the apex association of the industry, had suggested a 10-year payment scheme with a two-year moratorium, assuming that there would be no interest or penalty.

Companies say the government has earned about Rs 17,500 crore as licence fees and SUCs. “We are no longer questioning the amount that we have to pay. The important question is how we pay it in a staggered way, especially as most of the companies are public limited with shareholders and ensure it is a viable business,” said Rajan Mathew, director general, COAI.

The four companies appealing before the highest court have to fork out Rs 1,05,228 crore, based on the telecom department’s calculations.

Vodafone Idea has to pay the most: Rs 53,000 crore.

Based on these calculations, the three players have to pay over Rs 10,000 crore if they pay 10 percent upfront this financial year or double the amount if it is pegged at 20 percent. However, if the amount of all telcos is recovered, the upfront payment would be Rs 14,000 crore at 10 percent and double that amount at 20 percent.

The Tata group does not have any telecom business currently.―Authored by Surajeet Dasgupta, Business Standard