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Videocon dues may jack up Airtel's AGR bill

Bharti Airtel's adjusted gross revenue (AGR) bill is set to increase, with the Department of Telecommunications (DoT) likely to add a bulk of Videocon Telecommunications' Rs 2,041 crore dues to it, say government officials.

, ET Bureau|
Last Updated: Feb 19, 2020, 08.36 AM IST
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Mumbai: Bharti Airtel's adjusted gross revenue (AGR) bill is set to increase, with the Department of Telecommunications (DoT) likely to add a bulk of Videocon Telecommunications' Rs 2,041 crore dues to it, say government officials. Airtel though may not have to pick up any portion of Aircel's Rs 11,950 crore liabilities and Reliance Communications' dues of Rs 21,921 crore are unlikely to be transferred to Reliance Jio Infocomm.

While Jio has on its favour a court order, which on a separate spectrum trading deal had said the telco cannot be held responsible for the arrears of RCom, the views on Airtel’s liabilities are based on the use case of the spectrum it acquired from Videocon and Aircel, a government official said.

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With Aircel and RCom in the midst of bankruptcy proceedings, the DoT would now need to try to recover at least some part of its dues from the two as an operational creditor in the insolvency process, said experts. But as an operational creditor, the department at the most stands to get only a fraction of the dues.

Under the bandwidth trading rules of 2015, the seller is expected to clear all dues prior to concluding any spectrum deal. If any past dues are discovered after the closure of the deal, the DoT can recover this from one or both sides. The DoT is unlikely to invoke this clause for Jio’s 2016 trading deal with RCom due to a February 2019 ruling of the Telecom Disputes Settlement and Appellate Tribunal. “A subsequent Supreme Court judgement of July 2019 had dismissed DoT’s challenge of the tribunal’s order,” the official said, explaining why the DoT wouldn’t go after Jio for RCom’s dues.

Jio, which is the only telco to have paid up its AGR dues — Rs 195 crore — to the government by the January 23 deadline set by the Supreme Court, had bought more than 45 MHz of airwaves across 13 circles in the 800 MHz band from RCom in 2016 through a spectrum trading pact. But the DoT expects to be able to pin a bulk of Videocon Communications’ dues on Airtel. "DoT is looking into the spectrum trading deal between Bharti Airtel and Videocon and dues that need to be paid. Airtel may have to pick up a chunk of it," said the official, who did not want to be named.

In March 2016, Airtel bought 25 Mhz of spectrum in the 1800 Mhz band from Videocon Communications in six circles — Bihar, Gujarat, Haryana, Madhya Pradesh, UP (East) and UP (West) — for Rs 4,428 crore. The airwaves in the 2G and 3G category were being used by Videocon and revenue was generated from it, thus the company needs to pay licence fees and spectrum usage charge on this. Licence fees and SUC are paid on the basis of AGR.

In April 2016, Airtel bought another 23 Mhz spectrum in the 4G band of 2300 Mhz from Aircel in the circles of Tamil Nadu (including Chennai), Bihar, Jammu & Kashmir, West Bengal, Assam, North East, Odisha and Andhra Pradesh for Rs 3,500 crore.

But in this case, Airtel is unlikely to take any hit, said the official. "This is because most of the defunct telco's dues comes from its 2G and 3G airwaves whereas Airtel had picked up the barely used 4G spectrum," said an industry source. Airtel on Monday paid Rs 10,000 crore towards its dues, saying it would pay the balance, as per its own self-assessment, by March 17.
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