India’s Supreme Court has said that the government should cancel licences if unpaid spectrum fees would be ‘wiped out’, but has reserved its judgement on whether spectrum rights can be transferred or sold via insolvency proceedings, the Economic Times reports. As part of the ongoing Adjusted Gross Revenue (AGR) case, the court has speculated that AGR-related dues – including historical spectrum usage charges (SUCs) – of defunct and bankrupt providers should be collected from telcos that have purchased the spectrum rights of those operators or have used the airwaves via sharing agreements. The apex court further escalated its rhetoric, threatening to cancel concessions and reauction the spectrum if the dues cannot be collected. Supporting the stance, the Department of Telecommunications (DoT) told the court that, under the spectrum trading and sharing guidelines, all liabilities should be cleared before the rights are transferred. As such, the DoT added that the court could seek to recover dues from the sellers and buyers of spectrum, jointly or individually – potentially clearing the way for Reliance Jio Infocomm (Jio) and Bharti Airtel to be issued demands for the AGR dues of Reliance Communications (RCOM), Aircel and Videocon.
Meanwhile, the court has reserved its decision on the sale of spectrum under the Insolvency and Bankruptcy Code (IBC). Bankrupt cellcos Aircel and RCOM are attempting to sell their spectrum rights as part of their insolvency resolution process, but the DoT and apex court have argued that they cannot sell the spectrum on the basis that it is owned by the Indian government. The companies and their creditors, meanwhile, have stressed that the value of the companies’ is tied to their spectrum rights, and it is considered a security by banks for loans. If the government now says that those rights cannot be sold or traded, banks will cease providing loans to telcos, inflicting wider harm on the industry and the national economy, a representative of the Committee of Creditors (CoC) for Aircel explained.