Legacy telecom players in the country — such as Airtel, Vodafone, Reliance Communications and the state-owned MTNL and BSNL — have been delivered a huge blow with the Supreme Court upholding the Centre’s right to recover overdue levies and interest worth over Rs 92,000 crore from them.
The effect on Mukesh Ambani’s Reliance Jio, a late entrant that is tormenting the legacy players with stiff competition, will be negligible.
A government affidavit suggests Airtel owes Rs 21,682.13 crore as licence fee to the government while the dues of Vodafone total Rs 19,823.71 crore. Anil Ambani’s Reliance Communications, which has gone into bankruptcy resolution, owed a total of Rs 16,456.47 crore. BSNL will have to cough up Rs 2,098.72 crore and MTNL, Rs 2,537.48 crore.
The ruling was delivered by a bench headed by Justice Arun Mishra.
The dispute, raging since 2003, centred on the definition of the adjusted gross revenue (AGR), which formed the basis for the calculation of the sum the telecom companies owed the government after the telecom industry switched to a revenue-sharing arrangement with the Centre in 1999.
Telecom providers in India pay the department of telecommunications (DoT) nearly 3-5 per cent of their AGR in usage charges for spectrum and 8 per cent of the AGR as licence fees.
The companies contended the AGR should include just revenue accrued from core services while the DoT insisted it should include all revenue.
The bench of Justices Mishra, S.A. Nazeer and M.R. Shah said: “The definition of gross revenue is crystal clear in the agreement. How the adjusted gross revenue to be arrived at is also evident. It cannot be submitted that the revenue has not been defined in the contract. Once the gross revenue is defined, one cannot depart from it and the very meaning is to be given to the revenue for the agreement.... We have held the definition of AGR will prevail.”