AGR Judgment: DoT Moves SC Seeking 20-Yr Plan For Payment Of Dues By Telecom Companies

The Department of Telecommunications (DOT) has filed a plea in the Supreme Court for modification of the order dated October 24, 2019 vis-à-vis arriving at a formula for recovery of past dues from telecom service providers.

In the instant appeal, the union has stated that even though the Court had widened the definition of d the of adjusted gross revenue (AGR), leaving the three telcos, i.e. Vodafone Idea, Bharti Airtel and Tata Teleservices, collectively facing more than INR1.02 lakh crore in additional licence fees, spectrum usage charges (SUC), penalties and interest, it is imperative that the proposal for mode for recovery is approved.

Accordingly, mode of recovery of the said proposal lays down that all licencees which have been impacted by the Judgment dated October 24, 2019 may be allowed to pay the DoT assessed/ calculated dues in annual instalments over 20 years (of less if they so opt), duly protecting the net present value of the said dues using a discount rate of 8%.

Further, the proposal states that the interest of unpaid amount, penalty and interest on penalty in relation to the past dues as on the date of the judgment of the Supreme Court will not be levied beyond the date of the said judgment and the NPV will be protected using the discount rate.

"Mobile Number Portability (MNP) process has capacity limitations; this may lead to delays in porting numbers from non-operational to operational TSP (telecom service provider), and consequent disruption of services for customers. TSPs porting in customers from TSPs not able to provide services will also need additional access spectrum to maintain Quality of Service. Spectrum is acquired through auction," said the department seeking relaxation in the repayment of the AGR dues.

The Union has also contended in its averments that this modification is extremely important and thereby the approval of the proposal for mode of recovery as envisaged by the Government in the administrative hierarchy, keeping in mind the larger economic consequences on the nation.

The DoT has stated that the proposal, as laid down before court has been arrived at after examining issues in great detail and serious consideration to the market economy of the sector has been given due consideration.

Apropos, the petition inter alia lays down repercussions of the impact of service providers such as the impacted telcos on the public:-

"It is found that in the event of any one major service provider being impacted resulting into the drastic and most possible consequence of such service provider facing proceedings under the Insolvency & Bankruptcy Code, the following would be the inevitable adverse impact:

a) Impact on telecom services for a large proportion of customers

i) Mobile Number Portability (MNP) process has capacity limitations; this may lead to delays in porting numbers from non-operational to operational TSP, and consequent disruption of services for customer.

ii) TSP'S porting in customers from TSP's not able to provide services will also need additional access (and backhauk) spectrum to maintain quality of service. Access spectrum is acquired through auction" it said.

The adverse impact on direct and indirect employment, negative impact on other sectors of the economy, adverse sentiment on Foreign direct investments and adversities in rural areas, particularly in those districts where spread of digitization is aspirational.

In a huge blow to the telecom sector, the Supreme Court had in its 24 October judgment upheld the government's definition of adjusted gross revenue (AGR), on which it calculates levies on telecom operators.

Last month, the Supreme Court had rejected pleas by Vodafone Idea, Bharti Airtel and Tata Teleservices seeking review of the October 24 verdict that widened the definition of adjusted gross revenue (AGR).