Airtel and Vi petition apex court on AGR calculation errors

8 Jan 2021

Indian cellcos Bharti Airtel and Vodafone Idea (Vi) have petitioned the Supreme Court to challenge the Department of Telecommunications’ (DoT’s) calculation of their respective Adjusted Gross Revenue (AGR) dues, the Economic Times reports. In its new filing, Airtel argued that the DoT had made ‘arithmetical errors’ in determining the provider’s dues, including duplicating revenue addition, using the incorrect interest rate for calculating spectrum usage charges (SUCs) and failing to factor in payments already made by the operator. The operator highlights that comparatively minor mistakes in determining the value of the principal amount owed by Airtel have had a substantial impact on the final demand. According to the cellco every INR1 (USD0.01) mistakenly added to the principal amount increases Airtel’s final bill by INR8. Based on its own calculations, Airtel claims its AGR dues total INR130 billion, compared to the INR440 billion demanded by the DoT. For its part, Vi has submitted a similar filing, requesting that the due be re-examined. Vi’s calculations put its AGR burden at around INR215 billion, but the DoT has demanded INR584 billion from the cellco.

The matter relates to a decades long dispute between the government and the nation’s telcos over the definition of AGR, upon which the fees paid by providers is based. As noted by TeleGeography’s GlobalComms Database, the Supreme Court ruled in favour of the government in October 2019, finding that income from non-telecom related sources should be included in the calculation and ordered operators to pay outstanding fees dating back to 1999, plus interest, penalties and interest on the penalties. Affected companies were given just three months to pay dues estimated to total nearly INR1 trillion, but the exact amounts owed by the companies was not known at the time; the court seemingly mistook rough estimates submitted by the DoT as part of an earlier hearing as a finalised figure. In a chaotic series of court hearing over the following months, the Supreme Court scrapped with the DoT as well as operators, interpreting requests for more time as, respectively, a challenge to its authority and an attempt to evade paying the dues entirely. Consequently, the court pressured the DoT to collect fees to an unspecified value and demanded that cellcos pay the unknown amount. With the DoT warning that the process of collecting the necessary information and calculating the dues accurately would take months, the cellcos submitted self-assessments with their own calculations. Although these were far lower than the DoT’s initial estimates they were considered by both the DoT and the operators to be an acceptable starting point upon which to base the dues whilst the DoT completed its own assessments. The self-assessments submitted by the providers were dismissed out of hand by the Supreme Court, however, and the figures hastily cobbled together by the DoT were acknowledged to contain flaws – the DoT itself noted in February 2020 that it had detected variations in accounting practices by its offices across different circles. Nevertheless, it was the DoT’s figures that were ultimately accepted and used in subsequent hearings relating to a prolonged timeframe for payment of the dues.

The filings submitted by Airtel and Vi look to re-examine the discrepancies in the DoT’s calculations, and challenge the court’s decision to accept the flawed figures. Airtel highlights the DoT’s identification of its figures as ‘preliminary assessments’ that would be ‘subject to further revisions due to departmental assessments’ and calls the court’s decision to accept such as the final amount was ‘a clear mistake of the court … as the assessments of the dues had till then admittedly not been completed/finalised by the [DoT]’.