While the other telecom companies like Vodafone Idea and Bharti Airtel struggle to pay the dues for the Adjusted Gross Revenue (AGR) to the Department of Telecommunications (DoT), the Mukesh Ambani led telecom operator, Reliance Jio, has become the only telecom company to have successfully paid off dues in the industry to the DoT before the January 23 deadline. As per an ET report on the matter, Reliance Jio has paid Rs 195 crore to the DoT. On the other hand, Bharti Airtel is waiting on the decision of the Supreme Court on its modification plea for which it had filed for in the apex court. The decision is to come next week. In the meantime, a wing inside the DoT has directed the department not to take any “coercive” action on the telecom companies who have missed their AGR dues deadline. This means that Vodafone Idea and Bharti Airtel who have not paid their dues will not get a show-cause notice from the government asking them to explain reasons for the default.
Non-Telecom Companies Also Affected
The ripple of the AGR decision passed by the Supreme Court on October 24 has passed on to other industries as well. Other non-telecom companies such as oil corporations, railways and others have also been affected and have been slapped with massive dues. As such, Oil minister, Dharmendra Pradhan has expressed his views hoping that the decision would not affect these companies. The dues on the shoulders of the non-telecom companies in the AGR matter are well over Rs 3 lakh crore. Pradhan remarked about this, “We are discussing the matter with the Department of Telecommunications (DoT),” Pradhan said Thursday. He said the core business of public sector units (PSUs) such as GAIL, Oil India and Power Grid Corp of India Ltd (PGCIL) was not telecom and the current issue was probably a result of some “communication gap.”
AGR Matter Drags Down Telecom Industry
The matter on which verdict was passed on October 24 was going on in the Supreme Court since the last 15 years between the telecom companies and the government. Finally, the Supreme Court passed its verdict, saying that the definition of AGR would include non-core items as well. This means that while the companies calculate AGR, the revenue from non-telecom streams would also be considered. Since the license fees, Spectrum Usage Charges (SUC) and other levies like the USO fund is calculated over the AGR, the increase in AGR also led to an increase in these dues as well.
Now the only thing hurting the telecom companies is not the dues themselves. The penalties, interests and the interests on these penalties make up for more than 75% of the amount which these companies owe to the government. However, a little relief has come from the government, and although it does not affect the quantum of the dues, but the telecom companies have received a payment moratorium of 2 years for Rs 42,000 crore.
Telcos Expecting Some Relief from SC
While Bharti Airtel has to pay around Rs 35,500 crore to the DoT in AGR dues, Vodafone Idea is neck-deep under Rs 53,000 crore worth of dues. The industry-wide quantum for these dues racks up to be Rs 1.47 lakh crore. Owing to these, both of the telecom companies have posted massive losses in their previous quarters. To make up for these, Bharti Airtel has even gone ahead and conducted a $2 billion share placement with private equity holders. However, with the matter now in SC, the telecom companies are expecting some relief.