COAI wait for Supreme Court clarity on AGR, with thin duopoly possibility

Though it has been substantially diminished following some steps taken recently by both the government and the industry.

Published: 16th January 2020 12:57 PM  |   Last Updated: 16th January 2020 12:57 PM   |  A+A-

Supreme Court of India, New Delhi

Supreme Court of India in New Delhi. (Photo| Parveen Negi, EPS)


NEW DELHI: While the telecom industry awaits with bated breath on the outcome of their review petitions in the Supreme Court on the Adjusted Gross Revenue (AGR) plea on Thursday, the possibility of a duopoly -- meaning the exit of any operator though still hangs.

Though it has been substantially diminished following some steps taken recently by both the government and the industry.

"Let's see what the SC says on AGR review pleas. Today as things stand, it (the possibility of any operator exiting India) is minimal but it is still there because of all these companies are public companies and they are accountable to the public money invested.

EXPLAINER: What is AGR and why is it bogging down Vodafone and Airtel?

"But the Government has told us it is not interested in a duopoly. The industry has hinted they too are not interested in a duopoly. Something dramatic has to happen to push through such resolves.

"However, three to four months ago, the picture was bleaker and there was a much higher probability of someone exiting.

"Now with the new tariff increases, proposed IUC (network connection charges) staying in place and the consideration for a floor price, operators today are seeing much more of positive dimension approaching and support happening.

"All these would not have happened without government support. The danger of duopoly has substantially diminished and now it needs to be seen what comes out of the AGR decisions and how it impacts the industry.

ALSO READ: Telcos free up funds as AGR due deadline nears

"Our understanding is the DoT is keen to help, once the court clarifies. They have also given the moratorium for spectrum dues payments," Rajan Mathews, Director General of industry body COAI told IANS.

Mathews further said AGR should now be abolished since there is upfront payment on spectrum purchase and is high time to lower the licence fee and spectrum usage charges to combine 1 per cent of the total revenue from 8 per cent.

Vodafone Idea Ltd chairman Kumar Mangalam Birla had said that he might have to stop operations if the company did not receive any relief from the government following the Supreme Court order to pay dues of Rs 92,000 crore to the government related to the AGR issue from Airtel and VIL. Voda Idea has to pay additional AGR liability at Rs 44,200 crore and Airtel has RS 35,500 crore dues.

The Supreme Court will on Thursday take up in-chambers the petitions seeking review of its verdict on the AGR, which allowed Centre's plea to recover Rs 92,000 crore from telecom companies.

A bench headed by Justice Arun Mishra and comprising Justices S.A. Nazeer and M.R. Shah will consider the review petitions of the telecom operators, though, Vodafone Idea and Bharti Airtel had sought an open court hearing on their pleas. The current deadline to pay the amount is January 23.

Anticipating the worst, both the companies have raised funds to meet the liabilities. While Airtel has raised $3 billion in debt and equity, Vodafone idea has tweaked its Rights issue proceeds clause to be able to use the funds to partly meet the statutory dues.

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