Vodafone Idea Urgently Seeks Supreme Court Hearing on AGR Dues

Vodafone Idea Ltd (Vi) has asked the Supreme Court to urgently hear its petition about its adjusted gross revenue (AGR) dues. Chief Justice D.Y. Chandrachud said a decision on listing the case would be made soon.

Senior advocate Harish Salve, representing Vodafone Idea, stated that the company is trying to raise debt funding to pay its dues, but potential lenders need clarity on the exact amount owed.

Petition Filed

Vodafone Idea filed the petition last year, arguing that the Department of Telecommunications (DoT) made errors in calculating the final demand and that the company was not given a chance to be heard before the penalty was imposed.

Telecom operators must pay a percentage of their adjusted gross revenue as an annual licence fee to the government, so the definition of AGR is crucial for their profitability.

Salve mentioned that Vodafone Idea has undergone restructuring, including converting government dues to equity, making the Indian government the largest shareholder in the company with over a 32% stake.

₹1 Trillion in Telecom Dues

Both Bharti Airtel Ltd and Vodafone Idea filed curative petitions in September. These petitions are in response to a Supreme Court order from 1 September 2020, requiring telecom companies to pay their AGR dues over ten years. In July 2021, the Supreme Court dismissed a plea seeking corrections in the AGR dues, with telecom companies claiming multiple errors in the computation, which totaled more than ₹1 trillion.

Vodafone Idea, in its plea, raised concerns about its financial crisis, stating that the AGR demands exceeded the principal amount and insisting that it acted in good faith in disputing revenue definitions.

In its 2020 ruling, the Supreme Court instructed the telecom companies to pay 10% of their dues upfront by 31 March 2021, with a deferred payment schedule extending until 2031. Each year, 10% of the amount was to be paid by March 31. The Supreme Court also stated that there would be no revaluation of AGR dues, and any default would result in interest, penalties, and contempt of court charges.

The DoT estimated that Airtel owed ₹43,980 crore in AGR dues, while Airtel’s own estimate was ₹13,004 crore. For Vodafone Idea, the DoT’s demand was ₹58,254 crore, compared to the company’s assessment of ₹21,533 crore. Tata Teleservices faced a demand of ₹16,798 crore, whereas its calculation was ₹2,197 crore.

A Dispute Over Definition

The issue dates back to the National Telecom Policy (NTP) of 1999, which allowed telecom companies to pay their licence and spectrum fees as a percentage of their annual income. However, disputes arose over the definition of gross revenue, with telecom companies arguing that AGR should only include income from telecommunication activities, while the DoT argued for a broader definition that included all revenue.

In 2015, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruled that AGR should be calculated based only on revenue from telecommunication services. However, in 2019, the Supreme Court ruled that AGR should be based on a company’s total revenue, regardless of its source, and allowed the Centre to recover about ₹92,000 crore from the companies.