In a big setback for telecom companies, SC refuses AGR recomputation

In a big blow to telecom companies, the Supreme Court on Friday rejected a plea by Bharti Airtel, Vodafone Idea (Vi) and Tata teleservices’ to recompute Adjusted Gross Revenue dues worth over Rs 93,000 crore. A two-member bench headed by Justice L. Nageshwara Rao delivered the judgment after reserving the matter on July 19.

The court, in September last year, had granted the telecom companies 10 years to pay the outstanding amount to the government. Notwithstanding the order, telcos pleaded to recompute the figure spelled out by the Department of Telecom, as they were of the view that errors have crept in the calculation. Telcos had asked to rectify arithmetic errors, duplication, unaccounted payments, disallowed deductions, etc.

Vodafone Idea shares plummeted over 8.5% at the time of going to press. Both Tata Teleservices and Reliance communications hit the lower circuit. However, shares of Bharti Airtel are trading at over 5% in the green after the judgment.

Airtel had been asked by the apex court to pay Rs 43,980 crore, whereas its self-assessment showed a much lower figure of Rs 13,004 crore. So far, it has paid about Rs 18,004 cr.

On the other hand, Vodafone Idea has been demanded to pay about Rs 58,254 cr, of which it has cleared dues worth Rs 7,854 crore. Remember, the court had on three previous occasions said that recomputation is not possible.

Vi had said earlier in a hearing that the only way to pay this humongous amount is to ‘earn and pay’.

Vodafone Idea Chairman Kumar Mangalam Birla had told CNBC-TV18 in 2019 that the group “won’t throw good money after bad.” Implying cash from subsidiaries will not be infused and it may think of winding up its business. Further saying that the telco would have to ‘shut shop’ in the absence of government relief.

Adjusted Gross Revenue is a fee-sharing technique between the government and telcos which in 1999 shifted to the ‘revenue-sharing fee’ model, from the earlier ‘fixed license fee’ model. Telcos, in this regard, have been asked by the DoT to share a percentage of the dues with the centre.