SC allows govt to recover Rs 92k as AGR from telecoms

In a major blow to telecom service providers, the Supreme Court on Thursday allowed a plea by the Centre to recover adjusted gross revenue (AGR) of about Rs 92,000 crore from them.

A three-judge bench, presided over by Justice Arun Mishra, upheld the definition of adjusted gross revenue formulated by the Department of Telecom (DoT) and dismissed the telecom companies' objection to it.

The judgement sent shock wave to the debt-hit telecom sector as the shares of major firms tumbled in stock market. The industry urged the government to find a way out to end their financial woes which got further burdened with the top court's ruling.

Ending a 14-year-old legal battle between telecom firms and the DoT, the bench, also comprising Justices S A Nazeer and M R Shan, noted that the government intended to pump money from its share of telecom gross revenue into developing remote and uncovered areas, rural, tribal, and hilly areas.

The court said that it would fix a time frame for payment of dues with penalty and interest by the telecom companies as the firms sought at least six months time for it.

In July, the Centre had told the court that leading telecom firms like Bharti Airtel, Vodafone and state-owned MTNL and BSNL have pending licence fee of over Rs 92,641.61 crore till date.

As per the new telecom policy, licensees are required to share a percentage of their adjusted gross revenue (AGR) with the government as annual license fee (LF).

Besides, mobile telephone operators also have to pay spectrum usage charges (SUC) for the use of radio frequency spectrum allotted to them.

Issue of the AGR was a bone of contention between the DOT and telecom operators. Though operators argued that AGR should comprise only revenue from telecom services, the DoT insisted that AGR should include all revenues earned by an operator including that from non-core operations.

Telecom operators had moved the top court against the Telecom Disputes Settlement and Appellate Tribunal's (TDSAT) order which ruled that certain non-telecom revenues like rent, profit on sale of fixed assets, dividend and treasury income would be counted as AGR on which licence fee would have to be paid to the government.

The court said the gross revenue shall be inclusive of installation charges, late fees, sale proceeds of handsets (or any other terminal equipment etc), revenue on account of interest, dividend, value-added services, supplementary services, access or interconnection charges, roaming charges, revenue from permissible sharing of infrastructure and any other miscellaneous revenue, without any set-off for related item of expense, etc.

How much telecom firms have to pay?

The DOT informed the top court that Airtel owes Rs 21,682.13 crore, Vodafone: Rs 19,823.71 crore, Reliance Com : Rs 16,456.47 crore, BSNL : Rs 2,098.72 crore, MTNL : Rs 2,537.48 crore.