AGR dues: Supreme Court bench to hear ‘curative pleas’ from Bharti Airtel, Vodafone Idea, other telcos today

The Supreme Court of India (SC) will today (August 30) hear curative petitions filed by telecom giants Bharti Airtel and Vodafone Idea in the adjusted gross revenue (AGR) case, NDTV Profit reported.

A three judge Supreme Court bench headed by Chief Justice DY Chandrachud will hear the matter at 1.30 pm today. It will be a closed court hearing with no public attendance, as per the report.

Curative Pleas

The curative petitions filed by Airtel, Vodafone Idea and other telecom companies urge the court to reconsider its 2019 judgement in favour of the Department of Telecommunication's (DoT) order seeking AGR and other non-revenue related dues, it added.

Telcos claim that DoT made “a grave error” in the calculation of AGR dues and thus imposed “arbitrary” penalty amounts.

Telecom operators are required to pay a certain percentage of their adjusted gross revenue as an annual licence fee to the government, making the definition of what constitutes AGR critical for their profitability.

₹1 trillion in telecom dues

Both Bharti Airtel and Vodafone Idea filed curative petitions in September. Their petitions stem from a Supreme Court order dated 1 September, 2020, requiring telecom companies to pay their AGR dues over a 10-year period.

Notably, in July 2021, the Supreme Court dismissed a plea seeking corrections in the demand of AGR dues, with telecom companies claiming multiple errors in the computation, which totalled more than ₹1 trillion.

Vodafone Idea, in its plea to the Supreme Court, raised concerns about its financial crisis, stating that the AGR demands exceeded the principal amount. Vi insisted that it acted in good faith in disputing revenue definitions.

The apex court had in its 2020 ruling instructed the telecom companies to pay 10 per cent of their dues upfront by March, 31, 2021, with a deferred payment schedule extending until 2031. Each year, 10 per cent of the amount was to be paid by March 31.

The Supreme Court had also stated that there would be no revaluation of AGR dues, and any default would result in interest, penalties, and contempt of court charges.

The DoT had estimated that Airtel owed ₹43,980 crore in AGR dues, while Airtel’s own estimate was ₹13,004 crore. For Vodafone Idea, the DoT’s demand was ₹58,254 crore, compared to the company’s assessment of ₹21,533 crore. Tata Teleservices faced a demand of ₹16,798 crore, whereas its calculation was ₹2,197 crore.

Dispute over definition

The issue dates back to the National Telecom Policy (NTP) of 1999, which allowed telecom companies to pay their license and spectrum fees as a percentage of their annual income. However, disputes arose over the definition of gross revenue, with telecom companies arguing that AGR should only include income from telecommunication activities, while the DoT argued for a broader definition that included all revenue.

In 2015, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruled that AGR should be calculated based only on revenue from telecommunication services.

However, in 2019, the Supreme Court ruled that AGR should be based on a company’s total revenue, regardless of its source, and allowed the Centre to recover about ₹92,000 crore from the companies.