Blow to Airtel, Vodafone Idea as SC dismisses review plea in AGR case

The Supreme Court has dismissed review petitions by various telecom companies challenging the Supreme Court judgement in the Adjusted Gross Revenue (AGR) case. The hearing was conducted in closed chambers at 1:50 pm on Thursday, although Bharti Airtel and Vodafone Idea had called for an open court hearing. The companies have to pay pending AGR dues to the Department of Telecommunications by January 23.

Telecom companies, who are looking at a payout of Rs 93,000 crore, had sought relief earlier this month. Following an urgent hearing on January 8, the SC bench led by Justice Arun Mishra comprising Justices SA Nazeer and MR Shah had ruled that the apex court would take a call after talking to the Chief Justice of India Sharad Arvind Bobde, as to whether the review petitions filed would be heard in an open court or not.

Also read: Bharti Airtel, Vodafone Idea shares rise up to 5% ahead of SC verdict on AGR dues

With the payment deadline looming close, telecom players have expressed their inability to pay the pending AGR dues. Vodafone Idea Chairman Kumar Mangalam Birla has said the telco would shut shop without the government's help. Bharti Airtel Chairman Sunil Mittal has also asked the government to be sympathetic towards telcos.

Also read: Infographic: Can telcos survive Rs 93,000 crore AGR blow?

The reason mentioned by both companies is heavy losses incurred by them since the entry of Reliance Jio. Vodafone Idea is struggling with losses for the past three years that ballooned to Rs 50,922 crore in the September quarter of FY20 - the highest quarterly loss in India's corporate history - as it had to make significant provisions for the AGR dues. Airtel reported record losses to the tune of Rs 22,830 crore in the same quarter.

The AGR dispute dates back to 2003 when the association of telecom operators filed the first plea with the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) challenging the definition of AGR. As per standard accounting practice, companies have to make provisions for such claims. As per estimates, Airtel owes about Rs 21,682 crore while Vodafone Idea's payout will be much bigger at Rs 28,308 crore. Their provisioning is far short of the actual amount due.

Meanwhile, Airtel has said it's disappointed and is mulling a curative petition against the verdict. The company said issues raised by the telecom companies against the earlier verdict of the apex court were "genuine". "While respecting the Hon'ble Supreme Court's decision, we would like to express our disappointment as we believe the long-standing disputes raised regarding the AGR definition were bonafide and genuine," a company spokesperson said.

Highlighting the grim financial situation of the telecom industry, Airtel said the SC's verdict could further "erode" the viability of the sector as a whole.

The company said the money required to pay pending dues could well be used to introduce emerging technologies like 5G. "The industry needs to continue to invest in expanding networks, acquiring spectrum and introducing New Technologies like 5G. The money now required to pay punitive interest, penalty and interest on the penalty which forms nearly 75 per cent of AGR dues would have better served the digital mission of the country," it added.

ALSO READ: Bharti Airtel, Vodafone Idea seek urgent hearing of review petitions on pending AGR dues

Edited by Manoj Sharma