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Business News/ Budget 2019 / News/  Budget 2020: AGR dues to more than double telecom revenues to 1.33 trillion

Budget 2020: AGR dues to more than double telecom revenues to ₹1.33 trillion

SC to next week hear modification pleas of telecom cos
  • Budget papers silent on revenues from spectrum auction
  • Photo: MintPremium
    Photo: Mint

    NEW Delhi: The Centre expects revenues from the telecom sector to more than double in the next financial year, banking on adjusted gross revenue (AGR) related dues that it has sought from mobile service providers.

    This means any relief is unlikely for debt-laden telecom companies which have sought at least 10 years to pay these dues to the Department of Telecommunications (DoT).

    The government has pegged a revenue of a whopping 1.33 trillion from licence fee and spectrum usage charge payments by telecom licencees in financial year 2020-21, a 125% hike from 589.89 billion that it expects to earn in 2019-20, according to the Budget documents presented by Finance Minister Nirmala Sitharaman on Saturday.

    The additional 74,038 crore that the government hopes to earn is expected to come from AGR dues as the budget documents do not mention accounting for any proceeds from spectrum auction. Spectrum auction, if it happens, could further increase the government’s revenues from the sector, assuming the numbers giving today have not factored in that inflow.

    “Receipts under 'Other Communication Services' mainly relate to the license fees (LF) from telecom operators and receipts on account of spectrum usage charges (SUC). DoT collects recurring licence fees from various telecom service providers licensed by it," the government said in the Receipt Budget for 2020-2021.

    Telecom operators are liable to pay 3-5% and 8% of the AGR as spectrum usage charges and licence fees, respectively, to DoT.

    “An increase in expected revenue from the telecom sector can be explained by increases from 4 categories — repayment of previous spectrum debt, LF and SUC charges on continuing AGR revenue, proceeds from planned new spectrum auctions and now the new item of expected revenues from the Supreme Court mandated AGR dues," said Rajan Mathews, director general, Cellular Operators Association of India.

    “From the aggregate amount given, it is difficult to determine the component amounts and the increases expected in each category. But looking at the headline numbers, it seems like the relief on AGR dues on licence fee and spectrum usage charges sought by the industry has not materialised. Rather it appears to have gone in the opposite direction," Mathews said.

    “Some of the expectations of the debt laden sector in the form of reduction of levies and relief/ moratorium on current dues, seem to remain unaddressed in the budget. We hope some of the post budget policy reforms will seek to provide the much-needed support to the sector," Purushothaman KG, partner, telecom sector, leader, KPMG in India, said.

    An email query to DoT was unanswered till press time.

    Ending a 14-year court battle between the department of telecommunications (DoT) and mobile service providers, the Supreme Court in October upheld the government’s definition of adjusted gross revenue (AGR) and asked operators to pay over 1 trillion in past dues by 24 January.

    Airtel owes 35,586 crore to DoT, Vodafone Idea 50,000 crore, and Tata Teleservices, which has sold its mobile services business to Airtel, owes 14,000 crore.

    Vodafone Idea, Bharti Airtel, and Tata Teleservices have sought more time to pay AGR related dues and earlier this month filed a modification plea in the Supreme Court to negotiate a sustainable payment schedule with the DoT, which has issued demand notices for revenue share, interest, and penalty.

    The court is likely to hear the modification pleas next week.

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    Published: 01 Feb 2020, 03:38 PM IST
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