BT Buzz: Telcos struggle to make money as DoT fines pile up
Recent events involving DoT have sparked debate over its overbearing methods of handling the telecom sector and, in a way destroying it rather than promoting it
- Aug 7, 2019,
- Updated Aug 7, 2019 9:43 PM IST
The Department of Telecommunications (DoT) is creating fresh trouble for telecom operators. Recent events involving DoT have sparked debate over its overbearing methods of handling the sector and, in a way destroying it rather than promoting it. Be it DoT's top decision-making arm - Digital Communications Commission (DCC) - upholding the Rs 3,050-crore penalty on Bharti Airtel and Vodafone Idea or the recent affidavit filed in the Supreme Court, DoT is spreading fear far and wide, and weakening the sector to a point where there will be just two players in the market.
The most recent blow has come from the filing in the apex court last week where DoT asked telcos to pay up Rs 92,641 crore on account of license fees and spectrum usage charges (SUC). It's a 16-year-old dispute between DoT and telcos over the definition of AGR (adjusted gross revenues) - based on which license fees and SUC charges are calculated. DoT argues that a wider number of items - interest income, dividend, profits on the sale of assets, insurance claim and forex gain - should be included as components of AGR. Telcos, for obvious reasons, don't agree.
The fuss over defining AGR has dragged on long enough that the actual dispute amount is now a small proportion (25 per cent) of the total dues that the DoT is asking for. The Rs 92,641 crore includes Rs 23,189 crore as the disputed amount, Rs 41,650 crore of the levy of interest, Rs 10,923 crore as penalty, and Rs 16,878 crore as interest on penalty. Just about three years ago, the total dues were just Rs 29,474 crore.
It seems unfair why DoT wants to earn revenues on transactions that do not come under its ambit. For instance, if Airtel buys a commercial property and sells it for a premium, it doesn't seem right that DoT wants to take a share from it - even if the licenses given to telcos contain clauses that include sharing non-telecom revenues with the department.
Both TRAI and TDSAT (Telecom Disputes Settlement and Appellate Tribunal) have supported the telcos' on this issue, but DoT has stuck to its own position. For instance, TRAI excluded non-telecom revenue from AGR definition in 2015 but DoT challenged its recommendations.
The Department of Telecommunications (DoT) is creating fresh trouble for telecom operators. Recent events involving DoT have sparked debate over its overbearing methods of handling the sector and, in a way destroying it rather than promoting it. Be it DoT's top decision-making arm - Digital Communications Commission (DCC) - upholding the Rs 3,050-crore penalty on Bharti Airtel and Vodafone Idea or the recent affidavit filed in the Supreme Court, DoT is spreading fear far and wide, and weakening the sector to a point where there will be just two players in the market.
The most recent blow has come from the filing in the apex court last week where DoT asked telcos to pay up Rs 92,641 crore on account of license fees and spectrum usage charges (SUC). It's a 16-year-old dispute between DoT and telcos over the definition of AGR (adjusted gross revenues) - based on which license fees and SUC charges are calculated. DoT argues that a wider number of items - interest income, dividend, profits on the sale of assets, insurance claim and forex gain - should be included as components of AGR. Telcos, for obvious reasons, don't agree.
The fuss over defining AGR has dragged on long enough that the actual dispute amount is now a small proportion (25 per cent) of the total dues that the DoT is asking for. The Rs 92,641 crore includes Rs 23,189 crore as the disputed amount, Rs 41,650 crore of the levy of interest, Rs 10,923 crore as penalty, and Rs 16,878 crore as interest on penalty. Just about three years ago, the total dues were just Rs 29,474 crore.
It seems unfair why DoT wants to earn revenues on transactions that do not come under its ambit. For instance, if Airtel buys a commercial property and sells it for a premium, it doesn't seem right that DoT wants to take a share from it - even if the licenses given to telcos contain clauses that include sharing non-telecom revenues with the department.
Both TRAI and TDSAT (Telecom Disputes Settlement and Appellate Tribunal) have supported the telcos' on this issue, but DoT has stuck to its own position. For instance, TRAI excluded non-telecom revenue from AGR definition in 2015 but DoT challenged its recommendations.