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Airtel’s AGR burden likely to get heavier

The department of telecom is set to hold Bharti Airtel liable for some dues of Videocon tele and Aircel.

, ET Bureau|
Updated: Dec 13, 2019, 08.44 AM IST
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New Delhi: The Department of Telecommunications is set to hold Bharti Airtel liable for some of the adjusted gross revenue (AGR) dues that Videocon Telecommunications and Aircel owe the government, as the Sunil Mittal-led telco had bought some spectrum from the two bankrupt carriers back in 2017.

“DoT is looking into the spectrum trading deal between Bharti Airtel and Videocon Telecommunications and dues that need to be paid,” said a government official, who did not want to be identified.

The bankrupt telco — Videocon Telecommunications, which is in the midst of insolvency proceedings, owes about Rs 1,298 crore in licence fee, spectrum usage charge (SUC), interest and penalties to the government, after the Supreme Court order widened the definition of AGR to include non-core items. Telcos pay up to 8% of AGR as licence fees and 3-5% of AGR as SUC. “…the DoT is chalking out how much will either party have to pay,” the official said.

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The DoT has sent notices to all telcos to self-assess and pay their dues in three months from the apex court order of October 24. Officials said in case of any discrepancies between the telco and DoT calculations, the department will send fresh notices for the balance. Under a spectrum trading deal, Airtel bought 25 MHz spectrum in the 1800 MHz band from Videocon Telecommunications in six circles — Bihar, Gujarat, Haryana, Madhya Pradesh, UP (East) and UP (West) — for Rs 4,428 crore.

An industry official said that Videocon Telecommunications was using the spectrum for 2G and 3G services, and thus, was liable to pay licence fees and SUC. “Its dues may be divided between two parties.” Airtel, on its own, faces dues of over Rs 35,500 crore, and after provisioning for such payments, ran up record losses of over Rs 23,000 crore in the July-October quarter. The DoT move will thus further add to the burden of the second largest operator, which has repeatedly asked the government to grant them relief from the SC’s order that has sent shock waves across the sector.

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The government though has said it can’t provide AGR relief unless directed by the court. The telco and Videocon Telecommunications have both filed separate review petitions in the hope of the court softening its blow. Airtel, Videocon Telecommunications and Deloitte, the resolution professional for Videocon and Aircel, didn’t respond to ET’s emailed queries till press-time.

In the case of Aircel, which is also undergoing insolvency proceedings, Airtel is expected to be made liable for a ‘small part’ of Aircel’s nearly Rs 10,230 crore dues, another industry official said.

“This is because most of the defunct telco’s dues come from its 2G and 3G airwaves whereas Airtel had picked up the barely used 4G spectrum,” the official said. Also, SUC for 2300 MHZ band that Aircel bought in the 2010 is at 1% compared with 3-5% for other bands.

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Airtel bought 23 MHz spectrum in 2300 MHz band from bankrupt Aircel in eight circles — Tamil Nadu (including Chennai), Bihar, Jammu & Kashmir, West Bengal, Assam, North East, Orissa and Andhra Pradesh — for Rs 3,500 crore. In the Odisha circle, Airtel had to surrender 1.2 MHz airwaves worth Rs 38 crore because it breached the spectrum cap.

The genesis of these two spectrum trading deals happened when Airtel needed more 4G airwaves to combat the impending onslaught of Reliance Jio, which launched its commercial services in September 2016.

The rules are clear on the liabilities in a trading deal, said DoT officials. “The seller shall clear all its dues prior to concluding any spectrum trading. Thereafter, any dues recoverable up to the effective date of trade shall be a liability of the buyer,” according to the rules.

“The government shall, at its discretion, be entitled to recover the amount, if any, found recoverable subsequent to the effective date of the trade, which was not known to the parties at the time of the effective date of trade, from the buyer or the seller, jointly or severally.”

Also Read

AGR payment: Telecom companies to wait for SC decision

Telecom AGR dips 4.5% in Q2

No open-court hearing on AGR: Supreme Court

Telecom industry is on the path to recovery, but AGR an overhang: ICRA

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