Bharti Airtel AGR Dues Might Increase Because of Bought Spectrum from Insolvent Telcos

Bharti Airtel had bought spectrum from Videcon Telecommunication back in 2017 for a handful of circles for which it might be liable to pay the dues

By December 13th, 2019 AT 12:25 PM
Highlights
  • Bharti Airtel is under Rs 35,500 crore worth of dues
  • The telco has reported losses of Rs 23,000 crore in last quarter
  • The dues have come up as the result of AGR decision

Currently, the biggest burden in front of Sunil Bharti Mittal led telecom operator is regarding the Adjusted Gross Revenue (AGR) dues which it has to pay to the Department of Telecommunications (DoT). Now, if you are aware of the AGR dues and what actually constitutes them, then you also know that the DoT is holding the operators liable for the dues on the spectrum usage charges, license fees, interests and penalties. However, there are some things which might increase the burden of these dues on Bharti Airtel. As per an ET report, the DoT is looking into the spectrum buying of Videocon Telecommunications and Aircel by Bharti Airtel, on account of which the total AGR liabilities of Bharti Airtel might shoot up. It is worth noting that the carrier had bought spectrum from the two bankrupt carriers back in 2017. As per an anonymous government official, the DoT is looking into the spectrum trading deal between Videocon Telecommunications and Bharti Airtel.

bharti-airtel-dues-insolvent-telcos

Airtel Liable for Part of Videocon Telecommunication Dues

It is worth noting that Videocon Telecommunication currently remains under insolvency proceedings. The telecom operator owed about Rs 1,298 crore on account of Spectrum Usage Charged (SUC), interests and penalties to the government after the Supreme Court widened the definition of AGR saying that it would include non-core items as well. The telecom operators have to pay 8% of AGR as spectrum usage charges and 3-5% of the AGR as license fees. As per the official cited above, DoT is calculating how much each party will have to pay.

DoT Asks Telcos to Self Assess Dues

The department has sent notices to all the telecom operators in the industry right now, urging them to self-assess all the dues that they have to pay after the calculation of the AGR past the Supreme Court order. The DoT has also added that all the dues should be paid up in the three months period. Also, the DoT has said that in case there are balance dues after the self-assessment of dues, then the department will send balance notices to the telecom operators. To recall, Airtel bought 25 MHz spectrum in the 1800 MHz band from Videocon Telecommunications in six circles — Bihar, Gujarat, Haryana, Madhya Pradesh, UP (East) and UP (West) — for Rs 4,428 crore.

Troubles Might Increase for Bharti Airtel

As per DoT, Videocon Telecommunications was using the spectrum for 2G and 3G services and is thus liable for these dues. However, it could be the case that the dues might be divided between the two parties. Now, the struggle here is for the Sunil Bharti Mittal led telecom operator, Bharti Airtel which has to pay dues of Rs 35,500 crore to the DoT already for its own spectrum, licenses and interests. It was because of these dues that the telecom operator had reported losses of Rs 23,000 crore in the past quarter. If the dues of Videocon Telecom are also included in this, then the dues for Bharti Airtel will rise.

No Relief in Sight for Telecom Operators

Both Vodafone Idea and Bharti Airtel have requested the government to provide some relief for the telecom companies. The only relief until now has come in the form of two-year payment moratorium but does not seem to be enough for the telecom companies. Vodafone Idea has even said that it might have to shut its operations if further relief is not provided to the companies. In the case of Aircel as well, whose total dues are Rs 10,230 crore, Airtel might be liable for a small part of it. To recall, Airtel had bought spectrum from Aircel as well in eight circles.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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