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Supreme Court gives time for telecom firms to pay back AGR dues in 10 years

Telecom providers pay the department of telecommunications (DoT) nearly 3-5% of their AGR in usage charges for spectrum or airwaves and 8% of AGR as licence fees.
 
The top court had in its verdict on October 24, 2019, upheld the interpretation given to the definition of AGR by DoT and included revenues from various heads for calculation of AGR thereby imposing a cumulative burden of over Rs 1.69 lakh crore on 16 telecom companies.
 
The Supreme Court on Tuesday gave telecom firms 10 years to pay back dues amounting to about Rs 1.6 lakh crore of their adjusted gross revenue (AGR) they owe to the government by 2031.
 
While pronouncing the verdict, the top court said that till the last instalment is paid by the telcos, their bank guarantees furnished to DoT would be kept alive.
 
If a company fails to repay installments of its adjusted gross revenue (AGR) dues to the government, it will be punishable for contempt of court, the Supreme Court has ruled.
 
The telecom firms will have to pay 10% of dues by 2021 due to Covid-19 and the rest can be paid in installments by March 31, 2031, a bench headed by justice Arun Mishra ruled.
 
However, if a company fails to repay instalments, it will be punishable for contempt of court, it said.
 
It also asked the National Company Law Tribunal (NCLT) to decide whether spectrum can be a subject matter of resolution process on the point as to whether spectrum can be sold by the telecom companies facing proceedings under the Insolvency and Bankruptcy Code (IBC).
Major telecom companies, including Vodafone-Idea and Bharti Airtel, owe a substantial amount to the department of telecom (DoT).
 
The total liability on Vodafone-Idea is Rs 58,254 crore and Bharti Airtel was fastened with a total liability of Rs 43,980 crore.
 
Out of the remaining Rs 1.43 lakh crore outstanding dues (as the rest has already been repaid by a few firms), Rs 38,959 crore is due from four companies which are under liquidation.
 
Reliance Communication (RComm) which is one of the companies under insolvency, alone owes more than Rs 25,000 crore out of the Rs 38,959 crore.
Vodafone-Idea has paid more than Rs 7,000 crore and with more than Rs 50,000 crore outstanding.
 
Bharti Airtel has cleared more than Rs 18,000 crore and is yet to pay Rs 25,976 crore.
 
DoT in March this year moved a petition in the Supreme Court to grant the firms a staggered period of nearly 20 years to clear the outstanding AGR dues to the tune of Rs 1.43 lakh crore.
 
DoT submitted that competition in the telecom sector and quality of services given by mobile companies will be adversely impacted and it will lead to loss of direct and indirect employment besides negatively impacting foreign investment sentiment.
 
The telecoms sought 15 years to complete the payment during the course of the hearing.
 
While reserving the verdict on the plea on July 20, the bench that also comprised justice BR Gavai and justice Krishna Murari had said it won’t hear “even for a second” the arguments on reassessment or re-calculation of the AGR.
 
Earlier, the court had stated that the period of 15-20 years sought by some of the firms was not reasonable and the telcos were then asked to file their books of accounts for the last 10 years and give a reasonable time frame for paying the AGR dues.
 
Also, on the court’s direction to apprise it of the basis of spectrum sharing done by telecom companies, the DoT had on August 24 informed that all liabilities including AGR-related dues should be cleared by telecom firms prior to spectrum trading as per the guidelines.
 
Following the hearings, the top court ruled on Tuesday that the decision on the issue of sale of spectrum by telecom companies facing insolvency proceedings shall be taken by NCLT.
Splco Reporter
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