The telecom service operators will not face any coercive action from the Department of Telecommunication (DoT) as per a new note which has been issued inside the department itself. The matter of the Adjusted Gross Revenue (AGR) is going on in the Supreme Court, and a hearing is to be held some days from now. As such, the telecom operators had requested that no action be taken against them until the next hearing and it seems that thing would be in favour of the telecom companies until a hearing is held in the Supreme Court in this regard. The director of DoT's Licensing Finance Policy Wing said in this note which was seen by us, "You are directed to not to take any coercive action against the licensees in case they fail to comply with the Supreme Court order, until further orders.”
DoT to Hold Back on Sending Show Cause Notices
It is worth noting that the note was issued with approval of the member of the Finance division. The decision of the Supreme Court on the Adjusted Gross Revenue (AGR) matter came on October 24, 2019, when the Supreme Court ruled the decision in favour of the government, to the Department of Telecommunications (DoT). This put an end to a decade and a half long battle which was going on between the telecom companies and the government. The decision clarified that going forward, the AGR would be calculated depending on the non-core operations as well. This means that telecom companies’ AGR would depend both on core and non-core items. This put undue pressure on the telecom operators like Vodafone Idea and Bharti Airtel.
After calculation of the dues, it came up that Vodafone Idea owed around Rs 53,000 crore to the DoT and Bharti Airtel owed Rs 35,500 crores on account of license fees, Spectrum Usage Charges (SUC), interests, penalties and then interest over these penalties. The telecom companies were given three months time period to pay off these dues, and the deadline was to be January 23. But, as you can expect, the telecom operators have been reluctant to pay these dues to the DoT and have been on the lookout for some kind of relief. As a first attempt at relief, Bharti Airtel and Vodafone Idea, both had filed a review petition in the Supreme Court, which was first rejected by the SC. Then on, Bharti Airtel and Vodafone Idea again approached SC.
Hearing Pending in SC
Now, a hearing is pending for the matter. Vodafone Idea has also said to the DoT that it should hold on to any actions until there is any hearing on the matter. The new notification from the DoT ensures just that for the telecom companies. The note ensures that there would no harsh action taken against the telecom companies for non-payment of dues by the deadline. For example, it holds the DoT from sending a show-cause notice to the telecom companies to get an explanation as to why they were not able to make payment in time.
AGR Matter Threatens Industry Health
The matter of AGR has snowballed since October and become detrimental for the financial health of the industry. The chairman of Vodafone Idea has remarked that the telecom operator might have to shut shop in case there comes no relief from the government or SC in the AGR matter. On the other hand, Bharti Airtel had to post losses of Rs 23,000 crore on the lie of AGR dues.