Telecom stocks were at the receiving end of investor fury after the Supreme Court, in a setback for telecom companies, held telecom service providers including Bharti Airtel, Vodafone Idea and Tata Teleservices in contempt of court for not clearing their dues worth Rs 1.47 lakh crore with the telecom department. The top court summoned the managing directors of the companies on March 17 to explain why they have not deposited the money, and why contempt proceedings should not be initiated against them.
The BSE Telecom index traded 0.6 per cent lower in late-morning deals after the Supreme Court order. Bharti Airtel shed 0.5 per cent to Rs 537. Vodafone Idea (down 8 per cent at Rs 4), Tata Teleservices (9 per cent at Rs 3), Reliance Communications (down 4 per cent at 0.70 paise) and Bharti Infratel (down 4.2 per cent at Rs 235) were the other significant losers in the sector.
The telecom companies had earlier filed pleas seeking a new schedule for paying statutory dues towards adjusted gross revenue (AGR) to the Department of Telecommunications (DoT).
The telecom companies wanted to negotiate a fresh payment schedule with the telecom department, which had issued demand notices to them.
The payment dispute centers around the definition of adjusted gross revenue. In its October ruling, the top court had upheld the telecom department's definition of AGR.
According to the New Telecom Policy 1999, telecom licensees are required to share a percentage of their AGR with the government as annual licence fee (LF).
Telecom providers in the country pay the Department of Telecommunications 3-5 per cent of their AGR in spectrum usage charges and 8 per cent as licence fees.
The 1999 policy came after operators made representation to Centre for relief against steep licence fee which they had consistently defaulted since 1994 and an option to licensees to migrate from fixed licence fee to revenue sharing fee was made applicable in the year 1999.
Companies have long argued that AGR should comprise just revenue accrued from core services, while the government says it should include all revenue.