Bharti Airtel office building in Gurugram. (REUTERS)
Bharti Airtel office building in Gurugram. (REUTERS)

Bharti Airtel, Vodafone Idea file review petition at Supreme Court in AGR case

  • The matter pertained to the DoT claiming that telecom companies had under reported their revenues
  • Levies in the telecom sector are based on a percentage of their adjusted gross revenues (AGR)

NEW DELHI : Bharti Airtel and Vodafone Idea on Friday filed a petition with the Supreme Court (SC) to review its 24 October judgement that ordered telecom companies to pay over Rs92,000 crore to the department of telecommunications (DoT) in penalties in a 14-year-long case. The matter pertained to the DoT claiming that telecom companies had under reported their revenues.

Levies in the telecom sector are based on a percentage of their adjusted gross revenues (AGR). The DoT contended that the telecom companies’ AGR also included income from dividends and revenue from sale of handsets bundled with services, an argument that the companies had disputed.

The apex court had asked the companies to make the payments within three months of the judgement. The DoT had issued demand letters to these companies a little over a week ago.

The telecom sector has been reeling under stress due to the AGR norms and predatory pricing.

In a relief to telecom companies, the Union Cabinet on 20 November approved a moratorium of two years for spectrum payments. Also, starting next month, Vodafone Idea and Bharti Airtel will raise prices of their services for the first time in more than a decade. Reliance Jio has also announced its intent to hike tariffs.

The moratorium on spectrum payments coupled with the upcoming price hike will help the ailing telcos only to some extent as AGR dues are substantial.

Analysts at Credit Suisse said, “While deferment of spectrum auction payment is in line with our expectations, no decision on license fees reduction is clearly negative. Besides, if Vodafone Idea and Bharti Airtel face challenges in paying the annual spectrum fee worth 12,000 crore and 6,000 crore respectively, it will be more challenging for them to pay AGR dues of 53,000 crore and 35,600 crore immediately."

“The decision of the committee of secretaries on the AGR dues will be critical, as tariffs hikes alone may not be adequate to alleviate concerns on the telcos hefty payout requirements. To our understanding, DoT can possibly decide to either waive off penalties and interest on penalties entirely and/or allow for staggered payments. However, without any AGR payout relief, the ability of telcos to invest in networks will remain challenged and even raise concerns on the market structure," said brokerage firm SBICAP Securities.


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