Telcos Ask DoT not to Push for AGR Dispute Payment
Within 12 hours of Bharti Airtel Chairman Sunil Mittal meeting Telecom Minister Ravishankar Prasad on Monday, a Committee of Secretaries (CoS) was set up to address the woes of the telecom operators.
This too, when half the industry was not even present at the meeting as Kumar Mangalam Birla and Vodafone did not turn up and only Sunil and Rajan Mittal of Bharti Airtel were present.
Same day, Rajan Mathews, Director General, Cellular Operators Association of India (COAI) validated the link between the recent Supreme Court order asking telcos to pay up Rs 92,000 crore to the DoT as revenue share based on annual gross revenues (AGR).
In a statement today, Mathews said, "We welcome the move by the government to set up the CoS to look into the matter of financial distress and relief for telcos.
"However, given the recent SC order on AGR, time is of the essence and we respectfully suggest the CoS should perhaps take a two-pronged approach -- an immediate relief package to ensure operators' financial viability in the light of the SC order and the requirement to pay in 3 months", Mathews said. This clearly implies that the telecom operators are seeking a CoS-type arrangement to provide relief from the SC order.
Sunil Bharti Mittal of Bharti Airtel in a meeting on Monday with the Telecom Minister sought urgent relief from the Department of Telecommunications (DoT) on payment of levy on AGR and deferment of spectrum payment as auditors will qualify the company accounts in the coming 1-2 weeks in the absence of a relief.
The mention on the auditors' qualification and the urgency linked with it is because in the morning on Tuesday, Bharti Airtel announced it has deferred approval of the audited financial result for the second quarter till November 14 to "seek more clarity from DoT on the levy on annual gross revenues revenues (AGR) following the recent Supreme Court judgement", it said in a stock exchange filing.
The company is "approaching DoT to seek clarity on the total amounts involved and request for their support to deal with this adverse outcome", as per the filing.
There is a section of officials that apparently doesn't want today's constitution of CoS and the SC order to be linked, lest the CoS process is seen tantamount to "reinterpretation" of the SC order.
Apart from the implicit attempt to re-interpret the order, it also raises questions on the intent to violate a statutory payout which has been called "sacrosanct" by senior officials.
Telcos have also brought into the equation their ability to pay as is obvious from Bharti Airtle's missive to the DoT "seeking immediate relief to avert closure (of going concern)".
"While we are very respectful of the judgement given by the Hon'ble Supreme Court, however, the Supreme Court order now mandates payment on even notional revenues not paid by the customer because of the discount enjoyed by the customer as part of the plan, non-telecom services like sale of assets, receipt of dividend, foreign exchange gains etc", Bharti Airtel said.
Telcos are seeking immediate relief from DoT and Bharti Airtel suggested, "That in the worst case scenario, the government may levy only the principal amount (without any interest or penalty) pertaining to only licence fee (Not SUC) which be allowed to be paid over a period of say 10 years without interest.
"Our request is for the government to not press for AGR dispute payment in its entirety", Bharti Airtel said pointing out that it could not be the intent of the government to enrich itself by charging licence fee and SUC on licensed revenue/income.
Clearly, having lost the case in the Supreme Court, the industry is now making a last-ditch effort before the financial results are announced, to wrest some relief from the DoT citing the poor financial state of the companies in the sector.