SC tells telcos to pay dues in 3 months; Govt mulls relief

NEW DELHI: The Supreme Court has instructed telecom companies to deposit the dues sought by the government in three months in accordance with the court’s Thursday order backing a broader definition of adjusted gross revenue (AGR). “We give (telecom companies) three months’ time to deposit the amount, which is due and compliance be reported,” said the court order uploaded on its website Friday.Vodafone Idea and Bharti Airtel, the two telcos affected most by the SC order with pending licence fee and spectrum usage charge (SUC) dues of Rs 39,000 crore and over Rs 41,000 crore, respectively, declined to comment on the three-month deadline. Tata Teleservices, which sold its loss-making consumer mobility business to Airtel, faces dues worth nearly Rs 13,000 crore. Queries emailed to a spokesperson of the company remained unanswered as of press time Friday.The government will soon issue demand notices to telecom companies for additional licence fees and spectrum usage dues. “With this Supreme Court judgment, our hands are tied. We have no choice in the matter,” a senior government official told ET. Officials however told ET the authorities could explore ways to soften the blow on the industry saddled with over Rs 7 lakh crore of debt. The options being considered include reducing the interest and penalty, besides long-term measures like lowering licence fees and spectrum usage charge, and fixing a floor for tariffs. But this would be a tightrope walk, as the government would want to avoid vigilance action in future.Another official said the sector was in a fragile state and the government was thinking of providing relief. “But it can’t be confused with the issue of AGR. We have been fighting for this for 15 years,” he said. He acknowledged that while the judgment was in favour of the government, the timing was not ‘opportune’.Vodafone Idea, which analysts warned could be headed for bankruptcy unless granted some relief, said Friday that it would seek reprieve from the department of telecom (DoT), including waiver of interest and penalty.A DoT official said a decision on a waiver could only be taken at the “topmost levels” of the government. But officials said they would have to tread carefully, since it may set a wrong precedent.71769003 The Supreme Court on Thursday ruled that AGR for telcos should include all revenue accrued to the carriers, including from non-core activities, backing the telecom department’s stance. The order paved the way for the DoT to seek more than Rs 1.3 lakh crore in dues, penalty and interest from the sector.Reliance Jio, the latest entrant in the sector that is the only profitable telco, faces licence fee and SUC dues of Rs 41 crore.Vodafone Idea is already struggling with falling revenue, a shrinking user base, combined quarterly losses of nearly Rs 5,000 crore, and a negative free cash flow along with debt of more than Rs 99,000 crore.“The judgment represents a significant event with respect to the company… we will evaluate our next steps. The judgment has financial implications, which we are reviewing,” Vodafone Idea said. It said Thursday that it may file a review petition in the apex court.Besides waiving off or lowering penalty and interest, the government is working out a broader relief package for the industry that could include reassessing moratorium on payment for spectrum installments, offsetting input tax credit worth Rs 36,000 crore against future payments, and reducing licence fee by two percentage points to 6% by decreasing the contribution to the Universal Service Obligation Fund (USOF). Recently, telecom minister Ravi Shankar Prasad had said the government was working on spectrum pricing reforms.

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