1. What is the Issue Between Telecom Operators?
The issue was first raised back in 2002, when telcos were contesting the use and definition of AGR by the Department of Telecom (DoT), which said that higher the AGR of a telco, the higher the payments the companies have to make to the DoT.
The DoT’s definition of AGR was first challenged in 2005 by the Cellular Operators Association of India (COAI). A number of cases were filed across the country, which saw conflicting decisions. But on 24 October 2019, the Supreme Court decided to end the case once and for all, giving its judgment in favour of the DoT, which came as a rude shock to the telcos.
Why is that? The Supreme Court’s ruling means that AGR now includes all revenues of the telcos, including rent, handset sales and profits from sales of assets and scrap.
This has resulted in a pile-up of debt for Airtel and Vodafone Idea, forcing both the telcos to pay up to Rs 80,000 crore in the next three months. It’s worth noting that the list of telcos from the judgement includes the now defunct Reliance Communications, which has to pay around Rs 22,000 crore, but is currently in the midst of insolvency proceedings.
The overall payout by telcos could rise to an estimated Rs 1.23 lakh crore once spectrum usage charges (SUC) linked to the AGR are taken into account.