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DoT's suggestion to give telecom companies 20 years for AGR payment to help resurrect industry: COAI

Under the formula suggested by the government, the telecom companies impacted by the SC verdict will be allowed to pay the DoT-assessed dues in annual instalments for over 20 years.

Published: 16th March 2020 10:56 PM  |   Last Updated: 16th March 2020 10:56 PM   |  A+A-

mobile tower, signal, telecom

For representational purposes

By PTI

NEW DELHI: The telecom department's proposal to allow telecom companies pay adjusted gross revenue (AGR) dues in 20 years will improve their cash flow, and the decision to raise tariff by mobile operators will help in resurrecting the financially stressed sector, industry body COAI said on Monday.

"We are very pleased with the Department of Telecom's submission before the court to give 20 years time to telecom operators for paying adjusted gross revenue dues, which will help in reviving the industry," COAI Director General Rajan S Mathews told PTI.

The Centre moved the Supreme Court on Monday seeking approval of its formula to allow telecom companies to pay their AGR dues in annual instalments for over 20 years to avoid impact on the economy.

A bench of Justices Arun Mishra and MR Shah directed that the Centre's application be listed before the same bench which had given the October 24, 2019 verdict for payment of AGR dues, amounting to Rs 1.47 lakh crore, owed by telecom companies.

When asked that many telecom companies' licence will expire before 20 years, Mathews said that the operators are interested in buying 5G spectrum which will extend validity of their licence provided they get relief on the same. "When you talk of 20 years then these operators are intending to buy 5G spectrum at some point of time. There is an effort on DoT's side that there is more competition in the market," Mathews said.

Vodafone Idea's 22 licences are estimated to expire by 2033, Airtel's 8 licences are due to expire in 2021, six each in 2024 and 2034 and another two by 2035.

Under the formula suggested by the government, the telecom companies impacted by the verdict of the apex court of October 24, 2019 will be allowed to pay the DoT-assessed dues in annual instalments over 20 years (or less if they so opt), "duly protecting the next present value of the said dues using a discount rate of eight per cent (based on one-year marginal cost of lending rate of SBI which is currently 7.75 per cent)".

As per the formula, "interest on the unpaid amount, penalty, and interest on penalty in relation to the past dues as on the date of the judgement of the Supreme Court will not be levied beyond the date of the said judgement, and the net present value will be protected using the discount rate".

It states that the telecom firms would continue to be liable for interest, penalty, and interest on penalty for unpaid dues of licence fee and spectrum usage charge which arises prospectively after the October 24, 2019, date of judgement of the apex court.

Loss-making telecom operator Vodafone Idea on Monday said it has made an additional payment of Rs 3,354 crore towards adjusted gross revenue (AGR) to the Department of Telecom (DoT), thereby completing payment of principal amount calculated on self-assessment basis.

With this fresh payment, Vodafone Idea (VIL) has paid Rs 6,854 crore towards AGR dues. The DoT has raised total demand of around Rs 53,000 core for AGR liability of VIL which included interest, penalty and interest on delay in payment of the amount.

Telecom operator Bharti Airtel too on February 29 claimed that it cleared entire AGR dues which the company calculated on self assessment basis. It made additional payment of Rs 8,004 crore towards adjusted gross revenue dues to the DoT in addition to Rs 10,000 crore the company paid on February 17, 2020.

"Based on the aforesaid payment we have now complied with AGR judgement and the directions in the order of the Hon'ble Supreme Court dated October 24, 2019," Airtel had said. According to DoT estimates, Airtel owed nearly Rs 35,586 crore, including licence fee, spectrum usage charges with interest on unpaid amount, penalty and interest on penalty till July 2019.

The DoT has said that it has received part payment of about Rs 25,900 crore, excluding fresh payment of Rs 3,354 crore of VIL, from telecom operators towards statutory dues and has again directed telcos to make full payments.



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