India’s Department of Telecommunications (DoT) has amended the terms of the Unified License Agreement to alter the definition of Adjusted Gross Revenue (AGR) – the figure upon which most licence and spectrum fees paid by telcos are based – to remove most income derived from non-telecom sources. The amended system introduces a new term, Applicable Gross Revenue (ApGR), which excludes revenue from other sources such as non-telecom operations, interest, dividends, gains from foreign exchange fluctuations and others. AGR is then calculated based on ApGR minus certain other revenues depending on the authorised service under the licence. The move is part of the reform package for the sector that was approved by the government in September this year and aims to relieve some of the financial burden on the industry. Notably, the new AGR rules are effective from 1 October 2021 and are only applicable to dues arising after that date. The Economic Times writes that non-telecom items represent around 10% of the industry’s revenue.
As noted by TeleGeography’s GlobalComms Database, the definition of AGR was the subject of a decades-long dispute between the government and the industry over the inclusion of revenue from non-telecom sources. The matter was mostly resolved in October 2019 when the Supreme Court ruled in favour of the DoT, leading to the imposition of backdated dues, penalties and interest totalling trillions of rupees on the sector. Mishandling of the case dragged the matter out for a further two years, however, as the court refused to provide clarification on certain elements of its decision, prompting further legal challenges.