Communications Minister confirms AGR ruling applicable to all licensees

5 Dec 2019

The recent Supreme Court order on the definition of Adjusted Gross Revenue (AGR) will be applicable to all telecom licensees, the Economic Times writes. As such, many companies with only a minor participation in the industry will be required to pay dues based on 8% of their total revenue, with retrospective effect. In a speech to India’s parliament, Communications Minister Ravi Shankar Prasad confirmed that ‘while most of the licensees of the Department of Telecommunications (DoT) were not direct party to the dispute, the ratio of the judgement will be applicable on all licensees.’ The paper notes that the DoT lists 3,468 telecom licensees on its website, including utility and rail companies and government agencies amongst others. One estimate cited by the news outlet suggested that the figure owed by non-telecom firms would be around INR2.28 trillion (USD31.9 billion), with those companies affected having previously paid only a small amount as telecom services make up only a tiny fraction of their total earnings. The ET uses state-backed energy firm Power Grid Corporation as an example, noting that the company earned INR7.42 billion from its telecom business in the financial year ended 31 March 2019, putting its licence fee payment at around INR594 million under the previous interpretation of AGR. Under the expanded definition, however, the licence fee is based on the entirety of Power Grid’s INR356.61 billion annual turnover and would equate to around INR28.53 billion: close to four times the amount it made from the sector.

India, Department of Telecommunications (DoT)