 "AGR: No demand yet on GAIL, PowerGrid; Airtel, Voda Idea mull curative plea")
With the Supreme Court rejecting a review of its order that put Rs 1.47 trillion liability of past dues on telecom companies, firms such as Bharti Airtel and Vodafone Idea are evaluating filing a curative petition before the apex court for relaxation on penalties and payment deadline.
A three-judge Supreme Court bench headed by Justice Arun Mishra on Thursday dismissed review petitions filed by telecom companies against the apex court's October 24, 2019 verdict that asked for inclusion of non-telecom revenues for calculating statutory dues such as licence fee and spectrum usage charge. Dues dating back 15 years, as per the October order, have to be paid by January 23.
In a statement, Bharti Airtel, which faces a liability of nearly Rs 35,586 crore, said it was disappointed by the order and is now "evaluating filing a curative petition."
In a late evening exchange filing, Vodafone Idea, which has to pay Rs 53,038 crore, said it is also "exploring further options, including filing of a curative petition".
Following the October 24 Supreme Court order, the Department of Telecom (DoT) estimated that the total liability of 15 telecom companies, including penalties and interest, would be Rs 1.47 trillion.
It has estimated another Rs 2.4 trillion in liability for non-telecom companies such as state-owned gas utility GAIL India Ltd and power transmission firm PowerGrid, which had taken licences to trade broadband on optic fibre running along their pipelines and transmission lines.
Sources, however, said no demand notice was served either on GAIL or PowerGrid and only assessment orders were issued which the two companies contested putting across facts on revenues earned from such licenses.
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The assessment put GAIL liability at Rs 1.72 trillion and that of PowerGrid at Rs 21,000 crore. Another Rs 40,000 crore liability was assessed of Oil India Ltd.
However, a demand notice was served in case of GNFC for Rs 15097 crore.
In a statement, Airtel said: "While respecting the 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."
The industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole, it rued.
"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 penalty which forms nearly 75 per cent of AGR dues would have better served the digital mission of the country," Airtel said.
Vodafone Idea said "further to our communications dated 24 October 2019, 25 October 2019 and 26 October 2019..., we wish to inform you that Hon'ble Supreme Court has dismissed the review petition filed by the company and other telecom operators".
Industry body COAI said the dismissal of the review petition is the last straw in contributing to financial distress and said it remains to be seen whether the industry will recover from this setback.
"This added financial pressure on the sector will also adversely impact Prime Minister Narendra Modi's vision of Digital India," COAI director general Rajan S Mathews said expressing disappointment at the apex court order.
"The sector, which is currently reeling under a debt of Rs 4 trillion, is a key contributor to the Indian economy in terms of consumer benefit, employment, revenue generation and contributes 6.5 per cent to the GDP. The sector is already facing heavy taxes and levies in the range of 29-32 per cent, which are globally the highest," he said.
The statutory liabilities in the case of Bharti Airtel adds up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is spectrum dues (excluding the dues of Telenor and Tata Teleservices).
This week, the Sunil Mittal led company raised USD 3 billion through Qualified Institutional Placement (QIP) and FCCB route to pay for the statutory liabilities.
Vodafone Idea -- which is staring at unpaid statutory dues of Rs 53,038 crore, including Rs 24,729 crore of spectrum dues and Rs 28,309 crore in licence fee -- has already warned of shut down if no relief is given.
"If we we are not getting anything then I think it is end of story for Vodafone Idea," its Chairman Kumar Mangalam Birla had said last month.
Birla's Idea Cellular and British telecom giant Vodafone plc's India unit had merged in 2018 to compete with the onslaught of free voice calling and dirt cheap data unleashed by richest Indian Mukesh Ambani's Reliance Jio.
In the process, it accumulated Rs 1.17 trillion in debt and had posted corporate India's biggest loss for September 2019 quarter after it provisioned for the liability arising from the Supreme Court AGR verdict.
"It does not make sense to put good money after bad. That would be end of story for us. We will shut shop," Birla had said in December in a response to whether Vodafone Idea will put in more money.