Airtel’s Sunil Mittal hopes govt will address telcos’ woes2 min read . Updated: 28 Jul 2020, 11:36 PM IST
- Mittal said the sector requires govt support to recover financially, end legal disputes
- The worst may be behind for India’s telecom industry, we are yet to emerge from the woods
Bharti Airtel chairman Sunil Bharti Mittal told shareholders in remarks published on Tuesday that the telecom sector is not out of “the woods" yet, and that he hopes the government will look into the urgent requirements of telecom operators.
In a letter published in the annual report, Mittal said the sector requires government support and an end to “long-standing legal disputes" to help revive its financial health.
“While it’s clear that the worst may be behind for India’s telecom industry, we are yet to emerge from the woods. India still has some of the lowest data tariffs globally and the industry is barely able to cover the cost of capital. It requires much more support to repair the deep damage to its finances and make it viable for telecom operators to invest in future technologies."
Mittal welcomed the government’s move to declare telecom as an essential service during the covid-19 lockdown, adding that it has helped the industry gain the recognition it deserves and the commendable job it has done to keep India connected. However, the financial concerns of the sector continue and need government support to recover. Though the tariff increase last December has provided some cushion, telcos are still operating way below the levels to make the industry viable, he added.
“I hope the government will look into the urgent needs of the operators. It must also look at rationalizing the levies on the sector and close long standing legal disputes that are a big drag on the performance of operators."
The biggest concern of the operators is over their adjusted gross revenue (AGR) dues. Last week, the Supreme Court reserved its order on the staggered payments of AGR dues by Vodafone Idea, Bharti Airtel and Tata Teleservices. Both Vodafone Idea and Bharti Airtel have asked for a 15-year window to clear the dues, while Tata Teleservices has sought 7-10 years.
The apex court reiterated that there was “no room for self-assessment" and telcos have to treat the AGR dues calculated by the department of telecommunications (DoT) as final. However, the Centre is of the opinion that telcos should be granted time for paying the dues to avoid insolvency.
Abhishek Manu Singhvi, counsel for Bharti Airtel, said the DoT had erroneously calculated its dues of ₹43,780 crore, which include spectrum usage charges (SUC). He argued that AGR dues must not involve SUC, but only licence fees.
On 24 October 2019, the apex court upheld DoT’s broader definition of AGR, and ordered telcos to pay levies based on the definition, along with interest on the principal and penalty. The DoT calculates levies, such as SUC and licence fees based on AGR.
According to Bharti Airtel’s self-assessment, it owes ₹13,004 crore to the DoT. The telco has already paid this amount, besides another ₹5,000 crore in ad-hoc payment subject to refund after the DoT reconciles its own estimates with those of the telco. Despite the tariff hikes, the competitive pressure for telcos has been elevated since Reliance Jio’s data tariffs are still 25% lower than its rivals. The operators were in favour of setting up a floor price for telecom tariffs, which could improve the average revenue per user, helping them to improve finances.