DCC may discuss telcos' AGR issue on Friday; COAI presses for relief

The Digital Communications Commission, the apex decision-making body in the telecom sector, is expected to meet on Friday to deliberate on a relief package for the financially stressed industry.

As directed by the Supreme Court, telecom companies need to pay Rs 1.47 trillion to the government towards licence fee and spectrum charge dues linked to adjusted gross revenue (AGR). 

Of this, Bharti Airtel needs to pay Rs 35,500 crore and Vodafone Idea more than Rs 50,000 crore—they have paid just a fraction of the total till now. 

The industry has made a string of demands including a moratorium, staggered mode of payment, lower licence fee and setting up of a tariff floor.

Sources said that any relief for the sector would come with riders.

“They (companies) cannot manipulate us, they have to make further payments before even seeking relief,” a Department of Telecommunications (DoT) official said.

The DCC, formerly known as the Telecom Commission, comprises officials from the departments of telecommunications, electronics and information technology, revenue, and think tank NITI Aayog.

The DoT is expected to make a presentation to the commission regarding the possible relief scenarios. 

Cellular Operators’ Association of India, a body representing the telecom industry, on Thursday urged the Union government to step in so that the telecom sector can be brought back on track.

COAI, in a letter to Telecom Secretary Anshu Prakash, asked for easier terms for payment of statutory dues by telcos, including extension of loans at lower interest rates to cover the AGR liabilities, as also fast implementation of floor prices, to rescue the troubled sector.

The association has raised an alarm over banks’ unwillingness to take any risk. It has said banks must get a clear message from the government to support the sector.

Banks are “constantly asking telecom service providers to reduce their exposures by refusing to issue new bank guarantees or even to renew bank guarantees”, COAI Director General Rajan Mathews said in the letter.

It said the requirement of financial bank guarantees for securing licence fee payments should be done away with. In case the Telecom Department is of the view that financial bank guarantees are needed, the same should be reduced to one quarter of the licence fee, according to the association.

The COAI also sought an immediate cut in the licence fee levy to 3 per cent from 8 per cent, as well as a reduction in the spectrum usage charges.

Citing India’s low average revenue per user (ARPU) compared to markets like China, Brazil and Russia, COAI has also pressed for a floor price “to ensure the sector is sustainable’’.

Earlier in the week, Vodafone Idea made it clear to the government that it wouldn’t  be able to pay the court-mandated AGR dues in its entirety, unless a bailout was extended immediately.

The Supreme Court, in October last year, upheld the government’s position on including revenue from non-core businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

The Supreme Court, earlier this month, rejected a plea by Airtel and Vodafone Idea seeking an extension in the payment schedule. The court asked companies to deposit their AGR dues immediately. 

Vodafone Idea, in a letter to the DoT, has even sought adjustment of goods and services tax (GST) refund to the tune of Rs 8,000 crore against its AGR dues.