Cellcos reiterate position on AGR dues; Jio fires opening salvo in new price war

23 Sep 2020

Indian telecoms group Bharti Airtel has written to the Department of Telecommunications (DoT) to clarify that it has already paid the first instalment of its Adjusted Gross Revenue (AGR)-related dues, the Economic Times reports. The Supreme Court ruled on 1 September that operators must pay 10% of the total AGR dues by 31 March 2021, with the remainder to be cleared through annual payments until 31 March 2031. Following a statement from Minister of State for Communications Sanjay Dhotre, however, there appears to be some difference in interpretation between regulators and operators. In a written reply to parliament, the minister stated that telcos would be required to pay 10% of the total dues demanded by the DoT by 31 March 2021, without acknowledging the amounts already paid by the companies. As such, Airtel sought to reiterate that it has already paid INR180.04 billion (USD2.45 billion) towards its total bill of INR439.80 billion – or more than 40% of the demanded amount – and consequently its next payment was not due until 31 March 2022. Similarly, the CEO of Vodafone Idea Limited (VIL) – now operating under the Vi brand – told reporters this week that the company also had until the end of the next financial year to pay its next instalment, having already submitted its first payment. Vi has paid INR78.54 billion towards its dues of INR582.54 billion, although the minister told parliament that the amount paid was just INR35.00 billion, with the company still owing some INR547.54 billion.

In a related development, meanwhile, the minister confirmed that Reliance Jio Infocomm (Jio) would not be required to pay the AGR dues of Reliance Communications (RCOM), telling parliament that companies would not be held liable for the AGR dues of companies with which they share spectrum.

Whilst the apex court decision on AGR payments has given operators some breathing room, Vi remains in a precarious financial position and the company has confirmed that it is looking to increase its share of high ARPU subscribers, and will do so by improving its 4G network. To that end, the cellco says it will refarm its 2100MHz spectrum for 4G, with a phased shutdown of its 3G network. Disruptive rival Jio is set to capitalise on the company’s vulnerability, however, with the launch of a new range of tariffs targeting the high-ARPU post-paid segment. The offers provide unlimited voice and SMS and include bundles subscriptions to popular streaming services Netflix, Amazon Prime and Disney Plus. The launch has raised concerns that the company is keen to re-ignite a tariff war, after the previous price crash contributed to the exit of several companies from the sector.