The court, in its order on Tuesday, didn’t specifically defer the January 23 deadline. The phone companies expect that the DoT won’t force the carriers to pay their entire dues by Thursday and wait until the court decides on the matter.
“Until the court hears next week, we do not expect DoT to press for payments. We expect DoT to wait for court to clarify the modification petition,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI), an industry body that represents Bharti Airtel, Vodafone Idea and Reliance Jio Infocomm.
DoT officials told ET that if the phone companies remit a part of the dues by the deadline, the government is open to discussing a payment schedule for the remainder, possibly over a few years.
DoT may Seek Payment Plans
“Our stand is clear — we are saying at least show us your intention to pay. If the telecom companies pay some amount on the 23rd, then we can soften our stand,” a senior government official told ET.
Once such an initial payment is made, DoT will likely ask the companies how they propose to spread the payment “before they go to the court, so that we do not oppose their plea to negotiate the timeline with the DoT,” said another official.
COAI suggested this period could be 15 years.
Investors were buoyed by hopes of a positive outcome--Vodafone Idea surged 21.8% to close at Rs5.92 while Bharti Airtel ended 0.4% higher at Rs511.35 on the BSE Tuesday.
A bench headed by chief justice of India SA Bobde said on Tuesday that a justice Arun Mishra-led bench will hear the modification pleas next week. Mishra had headed the threemember bench that passed the October 24 verdict widening the definition of adjusted gross revenue (AGR) to include non-core items. This meant 15 telcos had to pay additional licence fees, spectrum usage charges (SUC), interest and penalty dues of more than Rs1.47 lakh crore by January 23. Licence fees and SUC are calculated on the basis of AGR.
Mahesh Agrawal of Agrawal and Associates represented Vodafone Idea while Harsh Kaushik and Manali Singhal appeared on behalf of Bharti Airtel and Tata Teleservices.
“Upon hearing the counsel, the Court made the following order: List next week before the Bench which passed judgment dated 24.10.2019 as per Rules,” SC said in its order Tuesday.
The court had last week rejected review petitions from the three telcos, prompting them to file the modification applications on Monday, warning of bankruptcies, defaults and job losses if forced to pay the whole amount at one go.
Vodafone Idea and Bharti Airtel face statutory dues of Rs 53,039 crore and Rs 35,586 crore, respectively, as per government disclosures to Parliament. Tata Teleservices, which has sold its consumer mobility business to Bharti Airtel, faces dues of Rs 13,823 crore.
Harsh Walia, partner at law firm Khaitan & Co, said the Thursday deadline stands.
“If the court had the intention of not letting any coercive action happen, then it could have given an order restraining DoT from taking any coercive action till next date of hearing,” he said.
DoT expects telcos to make initial payments totalling Rs25,000-30,000 crore, most of it coming from Bharti Airtel, officials told ET. “Airtel has just raised money,” one said, referring to its $3 billion fundraising exercise. But it’s not clear how much or whether the operators will pay up by December 23. ET had reported on January 18 that Vodafone was likely to submit around Rs 4,000 crore as token payment by January 23 while seeking to extend the timeline.
DoT hasn’t decided on any payment tenure. “We will need to sit down with the telcos and chart out the entire payment plan since there will be an interest component as well. Extension of timeline will come with an interest factor,” said the first official cited. Amended payment terms may need to be ratified by the cabinet or approved by a committee of secretaries, he said.
DoT should offer a structured debt package of 15 years with a two-year moratorium and recalibrate interest rates to bank borrowing rates, COAI’s Mathews said.
Vodafone Idea had said in its modification plea to the court that it will have to shut if there’s no relaxation on payment terms.
“If a suitable and appropriate arrangement is not made available, it will lead to immediate closure of one of the oldest and largest telecom companies in India,” according to the petition, which ET saw.
Bharti Airtel told the court on Monday that the calculations that need to be made are “complex” and cannot be done within the 90 days stipulated by the court. This will “require further interaction with the respondent as it covers licences across 22 circles and a period of over 15 years and post submission of the same to the respondents, the parties will have to reconcile all these calculations,” Bharti Airtel said in its modification application, seen by ET.
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5 Comments on this Story
Sameer 406 days ago
It will only delay the inevitable ..... this govt will cause many more jobs to be lost when these companies close down
Rewarding India406 days ago
I have no more hopes from this hopeless government
Nachiket Katha406 days ago
DOT should not be idiotic like SC (it can see how absurd the judgement is when it is applied to GAIL where company would have to pay more than 1.20 lakh crores (more than Airtel and Vodafone combined) despite using that license for internal use worth less than few thousand crores. DOT should not kill goose giving golden eggs. If tries to enforce contractual rights given by stupid SC judgement they would not only loose AGR dues but also spectrum liabilities and serivce tax in all of which they come with lower priority on waterfall under IBC. Already the price at which spectrum assets are sold in IBC (RCOM may get at the most 5000 crores) even banks would have NPA so chances of DOT getting anything is remote. As far PSU it would be disastrous destroying already backward telecom sector in the country (speeds of 11 MBPS less than failed state Pakistan at 13 MBPS and 23 mbps in Sri Lanka) forget 2 GBPS some operators are offering in western world. DOT has to show vision and realise that this judgement (on top of equally stupid 2G judgement) will destroy Telecom sector making digital India a distant dream.