Next AGR hearing on July 20, roadmap to be presented before that

In the last hearing on June 18, the Supreme Court had directed the Department of Telecommunications (DoT) to consider payment proposals by telecom companies who must furnish their books of accounts and balance sheets of last 10 years to show their financial capacity. The next hearing had been fixed for July 20.

It may be recalled that a three judge Bench of Justices Arun Mishra, Abdul Nazeer, and MR Shah was hearing a plea of DoT seeking NV staggered payment of AGR dues by telecom companies. The DoT had moved an application before the apex court seeking permission that the telcos be allowed to pay their AGR dues of Rs 1.43 lakh crore, in a staggered manner over the time period of 20 years. Vodafone Idea still needs to pay about Rs 51,400 crore and Airtel Rs 25,980 crore of balance AGR dues. While DoT has so far been sympathetic toward the CSPs, it is now taking a stand that the operators make some upfront payment to avail of the staggered mechanism sought by operators, of earn and pay, through instalments over 20 years.

The apex court in April had already rejected pleas of the three telcos including Vodafone Idea, Bharti Airtel and Tata Teleservices seeking review of the October 2019 verdict of the Supreme Court that had widened the definition of AGR and directed the telcos to pay their dues.

Senior Advocate Mukul Rohatgi appearing on behalf of Vodafone had submitted that the company’s position is extremely precarious, with its losses over several quarters and it is not in a position to give any fresh bank guarantee. It has already paid Rs 7,000 crore to the DoT. Over Rs 10,000 crore of bank guarantees are lying with the DoT, which should be considered as security. According to Rohatgi, payment of all the AGR can only be made through instalments over 20 years since the company can only earn and pay. The bench had responded to Rohatgi’s submission stating that Vodafone was a larger foreign player, and some amount must be deposited, especially when during the pandemic the government needs this money.

Vodafone has often stated that it lacks the resources to service over Rs 53,000 crore in AGR demand and the promoters are unwilling to invest more. The apex court has asked for details of the operator’s assets.

In its affidavit to Supreme Court, Airtel said that Bharti Group Companies have paid substantial sums in compliance with the Judgment and it is fully willing to pay whatever amounts are required to be paid in accordance with the Judgment. It had said, “While the EBITDA of the Bharti Companies is more than adequate to meet the dues, the Bharti Companies are humbly requesting this Hon’ble Court to grant a time period of 20 years. This will enable the Bharti Companies to ensure that they also continue to make capital expenditures to support the vision of digital India and allow the customers to have a choice of competing players to deliver services,” Airtel said in its affidavit to the Supreme Court.

Senior Advocate Dr AM Singhvi, appearing for Bharti Airtel informed that Rs 18,000 crores out of Rs 21000 crores have been paid. Bank guarantees of Rs 10,800 crore, consisting of Rs 4,000 crores toward dues under the license, including amount of Rs. 2800 crore equivalent to two quarters of estimated license fees; and Rs. 6,800 crores toward spectrum deferred liability is pending with DoT.

“These bank guarantees are available and lying with the DoT and can be used a security for amounts due, if any, and invoked in accordance with the license conditions by the DoT. It is also submitted that the licenses granted to the Bharti Companies also contain terms and conditions that provide the DoT the right to cancel the licenses in the event of any breach by the Bharti Companies in terms thereof. It is further submitted that spectrum is a valuable resource as recognized by this Hon’ble Court in numerous judgments,” Airtel had said.

Senior Advocate Arvind Datar on behalf of Tata Teleservices had informed the Court that Rs 37000 crores have been paid, and the company has been hit by the pandemic.

–CT Bureau