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Supreme Court rejects requests for AGR recalculation

21 Jul 2020

India’s Supreme Court has refused to hear arguments on potential reassessment of Adjusted Gross Revenue (AGR)-related dues, and dismissed the government’s request to allow operators to pay the fees over a 20-year period. The Economic Times writes that yesterday’s hearing on the case saw the apex court support the Department of Telecommunications’ (DoT’s) calculations on AGR dues, despite previous reports of inconsistencies in the ministry’s working. As such, the court noted that the amounts still to be paid by Bharti Airtel and Vodafone Idea stood at INR259.76 billion and INR503.99 billion (USD3.48 billion and USD6.74 billion) respectively, factoring in their payments to-date of INR180.04 billion and INR78.54 billion. The amounts include licence fees, spectrum usage charges, interest and penalties.

The government and representatives from telcos sought permission to extend the window for payment to 15 to 20 years, but this was rejected by the court as ‘unrealistic’. Indeed, the court remained unconvinced by arguments regarding the financial status of the mobile operators, and described requests for the fees to recalculated as ‘attempts … to wriggle out of the liability’. For its part, Vodafone Idea’s representative argued that the company’s entire net worth has been wiped out and that it would not be able to secure a guarantee or loan as all of its tangible assets are already secured before banks. The official added that the company’s turnover was mostly spent on operational costs: of a total turnover of INR6.27 trillion earned over the last ten years, the telco claimed it had spend INR4.95 trillion on expenses.

The court was unconvinced by the arguments, however, with Justice Arun Mishra maintaining that the companies are ‘behaving dishonestly’ and described the requests as ‘attempts to wriggle out of the liability’. Whilst the court said it would not contemplate ‘for a second’ arguments on recalculation of dues, it has reserved a final decision on the timeframe for the payments to be made. The court also noted that it would look into the cases of those companies undergoing insolvency proceedings – such as Reliance Communications (RCOM) and Aircel – suspecting that such measures were attempts to escape payment of AGR-related dues.

India, Aircel, Bharti Airtel, Department of Telecommunications (DoT), Reliance Communications (RCOM), Vi (Vodafone Idea Limited, VIL)

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