Need urgent change in AGR definition prospectively: COAI DG
By siliconindia | Monday, 15 June 2020, 06:13 Hrs
As the Indian telecom companies reel through a severe financial crisis with huge AGR dues towards to the Centre still pending, COAI Director General, Rajan Mathews has said that there is an immediate need to revise the definition of adjusted gross revenue (AGR) in a prospective manner to avoid any further similar issues for the industry.
Speaking to IANS, the DG of Cellular Operators Association of India (COAI) contended that amending the definition in a prospective manner would not violate the Supreme Court's order and the Telecom Regulatory Authority of India (TRAI) had itself taken up with issue few years back but not much development has taken place on that front so far.
"Prospectively redefining AGR does not violate the Supreme Court's order at all. Why are we waiting, we know the damage it has caused, we know the problems, then why are we waiting and letting this problem simmer.... it is going to cause more problems, because again you have the same definitional issue and amounts of money that will be claimed," he said.
Telecom operators need to pay licence fee and spectrum charges in the form of revenue share to the Centre. The revenue amount used to calculate this share is termed as AGR.
As per the Department of Telecommunications (DoT), the AGR calculations should incorporate all revenues earned by a telecom company, including from non-telecom sources such as deposit interests and sale of assets. The telcos, however, challenged this and said that it should include only revenue earned through telecom services.
Last October, the top court accepted the government's definition and ordered the telcos to pay the dues. As per DoT, telcos owed the government as much as Rs 1.47 lakh crore in past statutory dues including Rs 92,642 crore in unpaid licence fee, and another Rs 55,054 crore in outstanding spectrum usage charges.
Among the telecom majors, Jio has cleared its dues of Rs 195 crore accounted till January 31, 2020. The most affected have been Vodafone Idea and Bharti Airtel.
Vodafone Idea has paid Rs 6,854 crore of its dues while the DoT assessment pegs its dues at Rs 58,254 crore. The company's self-assessment pegged its dues at Rs 21,533 crore. Bharti Airtel, on the other hand has paid Rs 18,004 crore. As per DoT assessment, Airtel's dues stand at Rs 43,980 crore, while the company estimates its dues at Rs 13,004 crore.
Vodafone Idea is in a comparatively weaker financial situation right now and experts as well as the company has time and again said that the company may not be able to survive without government support or relief in terms of AGR.
On the concerns regarding Vodafone Idea's possible exit from the market, Mathews said that the government too does not want a duopoly or a two-player market as it would have a significant impact on the economy also.
The telecom industry veteran also said that the Competition Commission of India (CCI) has undertaken a study on the market situation right now and what needs to be done to keep the market structure competitive and robust.
"For a robust competition in place we need a three player market. The government recognises that, the industry recognises that and we think the government is going to look at ways that it can facilitate the continuity. Because now the biggest challenge to Vodafone Idea is obviously AGR," he said.
He said that the government's contention of giving a 20-year timeline for staggered payments by the telcos is move to resist companies from exiting the market.
Saying the immediate payment of the dues could lead to possible bankruptcies in the sector, the DoT has proposed a 20-year formula for staggered payments. The department told the court on Thursday that immediate payment would result in possible bankruptcies and could potentially hurt crores of customers.
On Thursday, the Supreme Court directed the companies to file affidavits on the time-frame and medium to ensure they clear the dues to the government, and also the security arrangements they can furnish.