Supreme Court rejects plea by telecom companies to review AGR judgement
In a big blow to telecom companies, the Supreme Court on Thursday dismissed their petitions asking to review its order on the interpretation of Adjusted Gross Revenue (AGR). The Supreme Court’s October, 2019 order had resulted in imposition of around Rs 92,000 crore burden on telecom companies.
The matter pertained to the Department of Telecom (DoT) claiming that telecom companies had under reported their revenues.
Levies in the telecom sector are based on a percentage of their adjusted gross revenues (AGR). The DoT contended that the telecom companies’ AGR also included income from dividends and revenue from sale of handsets bundled with services, an argument that the companies have disputed.
The Supreme Court accepted the government’s argument and in October last year, asked the companies to make the payments within three months of the judgement. The DoT subsequently issued demand letters to these companies.
Aditya Birla Group chairman Kumar Mangalam Birla had last month sounded a stark warning, saying the group’s telecom unit, Vodafone Idea Limited, would have to shut shop if no relief is forthcoming from the government to soften the blow from a Supreme Court verdict.
“If you ask me specifically, it is true we will shut shop if we don’t get relief. Because there is no company in the world that can pay that kind of fine in three months, it just doesn’t work like that,” Birla said in a conversation at the Hindustan Times Leadership Summit (HTLS).
The industrialist, however, who is also chairman of Vodafone Idea, said he is hopeful the company doesn’t find itself in a situation where it needs to exit from the market.
The telecom sector has been reeling under stress due to the AGR norms and predatory pricing.
In a relief to telecom companies, the Union Cabinet on November 20 approved a moratorium of two years for spectrum payments.
But the moratorium on spectrum payments coupled with the price hike that these firms have resorted to, will help the ailing telcos only to some extent as AGR dues are substantial.