Bharti Airtel, Vodafone Idea, other telcos may have to pay Rs 92,000 cr licence fee dues

The fate of the country’s financially stressed telecom industry is hanging in a precarious balance. The Supreme Court is shortly going to conclude the hearings on a case which is going since 2006 relating to the definition of adjusted gross revenue (AGR) and pronounce its judgment. If the operators lose the case, they may have to shell out a massive Rs 92,000 crore as outstanding licence fee.

According to the department of telecommunication’s calculations, the AGR dues of the telecom operators, which includes incumbents like Bharti Airtel and Vodafone, as on July 7, 2019 stands at Rs 92,641 crore. This includes licence fee dues as raised by DoT, interest on the unpaid part, penalty, and interest on penalty.

How a long-running case can keep on adding to the amount can be gauged from the fact that in 2016 the outstanding licence fee dues as per DoT’s methodology, including interest, penalty, and interest on penalty, stood at Rs 29,474 crore.

Telecom operators pay 8% of their adjusted gross revenue as licence fee to the government. However, what constitutes AGR has been a bone of contention between them and the government and the matter is being contested since 2006 in the Telecom Disputes Settlement and Appellate Tribunal, high courts and Supreme Court.

The basic issue is that according to DoT the definition of AGR includes all revenues accruing to operators except a few like termination and roaming charges which are collected on behalf of other operators. Operators on the other hand maintain that only those revenues should be part of AGR which accrues directly to them as part of the licence. Other income such as interest income, dividend income, value of rebate, discounts, free calls, etc should not be included in computation of AGR for the purpose of payment of licence fee.

The matter went to the TDSAT which on July 7, 2006 decided the matter in favour of the operators and against the government. The TDSAT’s decision was based on the fact that the DoT cannot demand a share of revenue as licence fees which are derived from activities that do not require a licence.

TDSAT’s judgment was challenged by the DoT in the Supreme Court. Initially the SC ruled in favour of the operators but in a later appeal against an order of the TDSAT it struck down the tribunal’s order since it questioned the validity of the licence agreement drawn up by the DoT. This was because the DoT maintained that it had taken inputs from the Telecom Regulatory Authority of India and drawn up the licence conditions which cannot be questioned by the TDSAT.

Taking cognisance of this, the SC ruled that questioning the validity of the licence condition was beyond the jurisdiction of the TDSAT and all it could do is to look into disputes between DoT and operators over interpretation of the licence conditions. Based on this ruling, various operators filed fresh petitions in TDSAT and various high courts.

In its subsequent order, the TDSAT excluded a number of items which could not be included in the ambit of AGR, and the same was challenged by DoT in the SC.

It is this matter on which the order will come shortly.