AGR issue: Will DoT bite the bullet this time? No, say experts

The 2G spectrum case was historic in many ways. Not only was the size of the scam huge at Rs 1.76 lakh crore, it also set a precedent for the government on how to price national assets. In subsequent auctions of telecom spectrum, coal, among others, the government priced these and other natural resources in such a way that nobody, especially CAG (Comptroller and Auditor General of India), could come back and blame it for miscalculations.

It seems that life has come full circle for the Department of Telecommunications (DoT) which is about to take a crucial decision pertaining to AGR (Adjusted Gross Revenues) payment dues of telecom operators like Bharti Airtel, Vodafone Idea and Tata Teleservices.

On Monday, a Supreme Court bench reserved its orders on the matter, and reportedly sought DoT's response on pleas by telcos on errors in calculation of AGR dues.

To recap, Airtel, Vodafone Idea and Tata Teleservices had filed individual applications before the Supreme Court in January seeking clarification, modification or recall of its previous AGR judgment. The telcos say that there are clerical or arithmetic errors in DoT's calculations of AGR, and the actual amount due is much lesser. As per DoT's calculations, the three telcos are supposed to pay Rs 1,02,234 crore.

"The question is whether DoT admits that there are errors or will it take a safe stance and go by its previous calculations. In all probability, the department is unlikely to bite the bullet. Their stance on the matter has been against us. When we had asked for clarifications on the matter, DoT asked us to approach the court as they would stick with the previous order of the court," says a senior executive in a top telco.

Also Read: Pegasus spyware: Is the NSO Group's technology good or evil?

"If it boils down to admitting mistake, DoT is unlikely to do it. No government official would want to be questioned post their retirement just because telcos are suffering," says a telecom analyst.

Telcos have been arguing that errors in DoT's calculations can be checked and verified through a simple process. These errors are particularly on three fronts -- payments made by the telcos but not accounted by DoT, double counting of some revenue items in the AGR demand, and permissible deductions not given by DoT on Interconnection Usage Charges (IUC) and roaming charges.

For instance, telcos are required to pay IUC charges to other telcos for calls that their customers make to networks of other operators. These payments are generally deducted from the gross revenues of the paying telco for arriving at AGR as the recipient telco is supposed to include it in its revenue for AGR computation.

Telcos say DoT hasn't followed this procedure. Additionally, same amounts have been considered twice under two different heads for calculating AGR.

The apex court has given two big judgements on the long-standing AGR issue. In October 2019, it asked telcos to pay Rs 1.69 lakh crore AGR dues to DoT. When telcos sought relief on the payments, the court asked them to pay dues in 10 instalments.

However, in the second order, the court said that the telcos shall not raise any dispute, and any re-assessment will not be allowed.