How the Government's Decision to Slash AGR on Telcos Affects the Telecom Industry?

How the Government's Decision to Slash AGR on Telcos Affects the Telecom Industry?

Telco giant Bharti Airtel, commenting on the Supreme Court verdict, states that the judgment on adjusted gross revenue would weaken the viability of the telecom sector. Further, the company has also insisted the government to take necessary measures to diminish the financial burden that the industry is currently undergoing.     

The Supreme Court has approved the centre's plea to recover the adjusted gross revenue of about 92,000 crore of License fee and around Rs 42,000 crore of SUC from the telecom service providers. This would increase the financial catastrophe of the stressed telecom operators.    

Airtel also points out the deteriorating condition of the telecom industry; initially, about 15 old operators were impacted by the order. But, at present, only two or three private-sector operators are offering services. Airtel is estimated to pay over 41,000 crore as license fee and spectrum usage charge (SUC), Vodafone Idea is slashed 40,000 crore, while Jio may have to pay around 13.35 crore as the license fee and SUC of Rs 28 crore. The telecom industry had previously undergone a dispute in 1999-2000 between the licensees and the licensor, which was also pertaining to the definition of AGR.   

The telcos claim that they have invested about 10 lakh crore just to set up the mobile networks for the past 20 years and offered the cheapest service across the world for about 1.19 billion customers in India. Furthermore, the companies also point out their contribution towards the country in terms of consumer benefits, revenue generation, employment, and the 6.5 percent share of India's GDP.  

"The TSPs have invested billions of dollars in developing the telecom sector and providing world-class services to consumers. This decision has come at a time when the sector is facing severe financial stress and may further weaken the viability of the sector as a whole," comments Bharti Airtel. It further adds, "The government must review the impact of this decision and find suitable ways to mitigate the financial burden on the already stressed industry."