Bharti Airtel had a spectrum agreement with Videocon
Bharti Airtel's plea against the Centre's demand that it pay the AGR (Adjusted Gross Revenue) dues of Videocon, will be heard by the Supreme Court today. The firm, which is India's biggest mobile carrier, has a spectrum agreement with Videocon, so the Department of Telecommunications wants Airtel to pay Videocon's dues. Videocon owes the government Rs. 1376 crore.
Airtel had entered a Rs 4,428 crore deal to purchase spectrum owned by Videocon Telecommunications in six circles -- Bihar, Haryana, Madhya Pradesh, Uttar Pradesh (East), UP (West) and Gujarat -- in March 2016.
Airtel, however, questioned the Centre's demand for Videocon's AGR, saying it could not be held responsible for the company's past dues.
The telecom department then went to court. In April this year, the government told Supreme Court that it had raised the demand in compliance with an earlier order of the court, but received a negative response from Airtel.
During a hearing in September 2020, the top court had said that according to spectrum trading guidelines, AGR dues need to be met before trading of licenses and if the seller could not pay, the buyer will have to step up.
Reports said after Airtel's move, the telecom department took legal views on encashing the company's bank guarantee to raise the dues of Videocon.
Currently, if a telco fails to pay its quarterly licence or spectrum-related dues, then the bank guarantees are with the telecom department are encashed. The bank guarantees are also periodically replenished.
Last year, the Supreme Court had refused to stop the government from taking coercive action against telcos to raise AGR dues. The court made it clear it will not hear "even for a second" the arguments on reassessment or re-calculation of the AGR related dues of telecom companies, which run to around Rs 1.6 lakh crore.
In a subsequent hearing, the court also asked the telecom department how it plans to recover the AGR-related dues from companies facing insolvency proceedings and whether spectrum given to these companies can be sold.
The telecom department told the court that spectrum is owned by the nation, held in trust by the government and cannot be sold.
"Telecoms don't own spectrum, contract allows only its use," the department said. Spectrum cannot be subjected to IBC (Insolvency and Bankruptcy Code) proceedings either, it said.