Setback for telcos as SC orders them to pay Rs 92,000 crore to government

In a major setback to telecom companies including Bharti Airtel, Vodafone-Idea and Reliance Communications, the Supreme Court rejected these companies' definition of Adjusted Gross Revenue (AGR) on Thursday.

It is to be noted that the legal tussle between the government and the telecom firms over the definition of AGR was ongoing for the last 14 years. The telecom department calculates levies payable by companies on the basis of AGR.  The SC's decision means that telecom companies will have to pay Rs. 92,000 crore to the government. The apex court also ruled it will later fix a time schedule as to when the companies will have to pay the amount.

The SC said that all revenues, except for termination fee and roaming charges, will be a part of the AGR, while the telecom firms had claimed that non-telecom, non-core revenues should not be included in the AGR.

Telcos had also said the SC said that non-telecom revenues such as rent, dividend income, interest income, profit from the sale of fixed assets should not be included in AGR's definition. Experts maintain that the SC ruling is huge disappointment for telecom companies and it exposes the weakness in the licensing regime of the government.

The AGR definition was very important because licence fee and spectrum usage charges are also computed as a percentage of the AGR. The telcos computed licence fee and paid it at 8 percent of the AGR to the government. The amount of Rs 92,000 crore claimed by the government as licence fee includes the principal amount, interest and penalties. The government had sought Rs 21,682 crore from Bharti Airtel, Rs 28,300 crore from Voda-Idea, Rs 16,500 crore from RCom, Rs 2100 crore from BSNL and Rs 2,537 crore from MTNL.