Top Court Gives Telecom Firms 10 Years To Pay Dues, Contempt If Default

The top court said the 10-year timeline for payment of AGR dues will begin from April 1, 2021 and the payments will have to be made in installments till March 31, 2031.

The telecom companies will have to clear their dues by February 7 each year.

The Supreme Court on Tuesday gave telecom companies 10 years to clear huge dues owed to the government, called adjusted gross revenue (AGR), amounting to about Rs 1.6 lakh crore, in staggered payments. A three-judge bench of the top court said telecom companies must pay 10 per cent of the dues by March 31 next year. The Supreme Court rejected a 20-year payment timeline proposed by the central government and supported by telecom companies, which are reeling under piles of debt amid intense competition.

Here are 10 things to know:

  1. The top court said the 10-year timeline for payment of AGR dues will begin from April 1, 2021, and the payments will have to be made in instalments till March 31, 2031. 

  2. The telecom companies will have to clear their dues by February 7 each year and non-payment of dues will incur penalty, interest and contempt of court, the bench added.

  3. The dispute centres around the definition of adjusted gross revenue (AGR). Telecoms pay a percentage of their revenues as license fee to government. They argue that non-core business like rent or income from sale of handsets or roaming charges should not be included in the revenue of which they pay a percentage - they want to pay only on revenue earned from their core business. The court did not agree.

  4. The Supreme Court asked the managing directors or chief executive officers of the concerned telecom companies to give personal guarantees on the payments within four weeks.

  5. During the earlier hearings, Tata Telecom had asked for a window of at least 7-10 years for payment of dues, whereas Vodafone-Idea and Bharti Airtel had each suggested payment over 15 years. The Department of Telecommunications (DoT) had, however, stuck to the Cabinet's proposal of payment within 20 years.

  6. The court said the demand made by the DoT and verdict on the matter is final. On July 20, the three-judge bench had reserved its order on the timeline for staggered payment of dues and took up the issue of spectrum licences held by the companies.

  7. The Supreme Court also said the issue of sale of spectrum by telecom companies facing insolvency proceedings will be decided by the National Company Law Tribunal (NCLT).

  8. The ruling should come as a relief for Bharti Airtel and Vodafone Idea, which have been struggling with mounting losses.

  9. Vodafone Idea chairman Kumar Mangalam Birla had warned in December that the company was headed towards insolvency.

  10. Telecom stocks traded mixed after the verdict. Bharti Airtel and RCom shares gained up to 5 per cent each on the BSE, while Vodafone Idea plunged 15 per cent.