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(Photo: Mint)
(Photo: Mint)

What to expect from Supreme Court’s AGR verdict on Tuesday

The verdict will be out on issues of staggered payments of AGR dues, recovery of dues from bankrupt telcos and spectrum ownership

The Supreme Court on Tuesday will pronounce its order on staggered payment of adjusted gross revenue (AGR)-related dues by Vodafone Idea Ltd, Bharti Airtel Ltd and Tata Teleservices Ltd. It will also decide on the ways to recover dues from bankrupt telecom operators under Insolvency and Bankruptcy Code (IBC). Mukesh Ambani’s Reliance Jio cleared its relatively minuscule dues of 195.18 crore in January.

Here is a list of what to expect from the judgement:

Staggered Payments:

The Department of Telecommunications (DoT) in March appealed to the apex court seeking 20 years for payment of AGR dues after telcos expressed inability to make upfront payment as per the Supreme Court’s 24 October judgment. Vodafone Idea’s survival depends on the number of years the court grants for payment of the dues that include spectrum usage charges, licence fee, interest, penalty and interest on penalty. The apex court has shown reservations about allowing 20 years to clear the AGR dues, following which Voda Idea and Airtel have sought 15 years, while Tata Teleservices has requested for 7-10 years.

Bankrupt Telcos:

The Supreme Court will direct the government on the ways to recover AGR dues from bankrupt Reliance Communications Ltd (RCom), Aircel Group and Videocon Telecommunications Ltd. While these telecom companies are non-operational, the spectrum they hold is being used by Jio by Reliance Jio and Airtel. The apex court has asked on why should the telcos that use radio airwaves of the bankrupt companies should not be liable to pay their AGR dues. If the court decides so, Jio and Airtel will have to pay RCom’s dues of 25,199 crore and Videocon’s 1,376 crore, respectively.

Spectrum Ownership:

The arguments on recovery of AGR dues from bankrupt telecom operators highlighted the issue of who owns the spectrum. While the telcos and banks argued that spectrum is an asset and should be sold under the IBC proceedings, the government called it national property. Banks have also argued that spectrum is a security against which they disburse loans to telcos. The DoT fears that it may recover little or next to nothing under IBC resolution process, which gives greater preference to financial creditors on recovery proceeds. All bankrupt telcos have classified the DoT as an operational creditor.

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