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Clear revenue share dues as per Supreme Court order: DoT to telecom operators

The DoT has issued notice to telcos to pay their revenue share dues within three months as directed by the SC.

, ET Bureau|
Updated: Nov 16, 2019, 05.05 PM IST
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Will AGR issue force telecom sector to move towards duopoly?
Will AGR issue force telecom sector to move towards duopoly?
The Department of Telecommunications (DoT) has asked telcos and internet service providers to pay up license fees and spectrum usage charges after doing their individual assessments on the wider definition of adjusted gross revenue (AGR), as decided by the Supreme Court last month.

In its first official step towards realising additional AGR dues after the October 24 apex court order, DoT Wednesday issued notices to all telcos, ISPs, virtual network operators and their associations to pay up and submit compliance documents within three months of the ruling, as mandated by the court.

“It is the responsibility of the licensees to pay the license fee and other dues after carrying out their own assessment as prescribed in the license agreement,” DoT has said in the notice seen by ET.

“You are therefore directed to make the payment in accordance with the order of the Hon'ble Supreme Court and submit the requisite documents to ensure the compliance within the stipulated timeframe,” it added.

As per DoT's calculations submitted to the SC middle of July, 15 telcos owed nearly Rs93,000 crore in license fees, penalties and interest. Additionally, telcos owe over 41,000 crore in SUC charges. Vodafone Idea and Bharti Airtel are the worst hit, with combined dues of over Rs80,000 crore. Tata Teleservices, which sold its consumer mobility business to Airtel, owes some Rs13,000 crore and bankrupt Reliance Communications some Rs20,000 crore.

Officials said that DoT is issuing demand notices for license fees (LF) and spectrum usage charges (SUC) through its circle offices, to all telcos and ISPs till the last financial year ended March 31, 2019.

“They’re supposed to pay LF and SUC basis the AGR as defined by the SC… Subject to our checking of AGR statement and payments made, certified by auditors, and if there’s any discrepancy then we will send separate notices for any balance dues,” an official said.

Another official added, “Carriers will have to recalculate their AGR for the ongoing financial year (through March 2020) as well, and hence demands for the present fiscal will be sent out in future,” implying that multiple notices are expected to go out.

Telcos said they have received the notices, which they will review and comply.

"However, we're still looking for relief from the government in terms of the final payments," said Rajan Mathews, director general of Cellular Operators Association of India (COAI), which represents all carriers operating in India.

DoT has been in dispute with carriers for nearly 16 years over the correct interpretation of licence for fees based on AGR, basis which licence and SUC fees are paid by telcos to the government. While telcos have argued that AGR should include only telecom services related revenue, DoT has maintained that non-core sources such as rent, profit on sale of fixed assets, dividend, interest and miscellaneous income should be included as well.

In its October 24 judgement, the Supreme Court ruled in favour of DoT, implying that telecom service providers will now need to pay their dues basis the wider definition of AGR which includes non-core items.

Bharti Airtel and Vodafone Idea, that are due to report their quarterly results on Thursday, are set to file review petitions in the SC against the AGR order as they will bear the maximum brunt of the payout.

In parallel, the government has set up a committee of secretaries under the Cabinet Secretary to take stock of financial stress in the debt-laden telecom sector and suggest steps to provide relief.

The panel is likely to recommend a reduction in the licence fee paid by telecom companies and allow a two-year moratorium on spectrum payments, as part of measures to grant relief to the debt-laden sector, ET reported on Wednesday.
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