The SC verdict ends the 14-year-old legal battle between mobile operators and the government on the definition of Adjusted Gross Revenue (AGR) used to calculate spectrum charges and licence fees. Telcos will now have to pay the Department of Telecommunications (DoT) Rs 92,000 crores in the spectrum and licence fee dues that have accrued over the years.
Crux of the Matter
The litigation involved a dispute raised by telecom providers in the definition of adjusted gross revenue as in clause 19.1 of the licence agreement granted by the Government of India to them telecom service providers.
The shares of Bharti Airtel and Vodafone Idea Ltd. fell as much as 4.9 and 13.3 per cent respectively after the verdict.
Bharti Airtel and Vodafone Idea will have to pay up Rs.21,682 crore and Rs.28,309 crore respectively.
As a sign of the liberalisation allowed in the sector, the court highlighted how the 15% AGR, fixed as license fee under revenue sharing, was reduced to 13% and lastly to 8% in 2013
Curiopedia
Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT). The AGR is divided into spectrum usage charges and licensing fees, pegged between 3-5% and 8% respectively. As per DoT, the charges are calculated based on all revenues earned by a telco – including non-telecom related sources such as deposit interests and asset sales. The case has been on since 2005 when the Cellular Operators Association of India (COAI) challenged the government’s definition for AGR calculation. Later in 2015, the TDSAT said AGR included all receipts except capital receipts and revenue from non-core sources such as rent, profit on the sale of fixed assets, dividend, interest and miscellaneous income, etc.
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