The Supreme Court on Tuesday will resume hearing on the issue of adjusted gross revenue dues from telecom companies. The three-judge SC bench led by Justice Arun Mishra has raised three key issues:
First, should Reliance Jio pay RCom’s AGR dues, which are over Rs 25,000 crore? The apex court has sought to crystalise a principle that the user of the spectrum should pay AGR dues. The reasoning is Jio has been using RCom’s spectrum since 2016. Jio will argue that they have already paid the Spectrum Usage Charge as stipulated by the DOT under the Spectrum Sharing Guidelines.
The second key issue the Supreme Court is seeking pertains to the details of companies that are bidding for the insolvent telcos like RCom and Aircel. The line of inquiry taken by the court suggests that it fears that a proxy or front company may propose interest under the Insolvency and Bankruptcy Code. The court wants info on which entities, persons are the beneficial owners of the companies submitting bids.
The third issue the Supreme Court has proposed that dues payable to Govt for use of govt owned public resources like spectrum, should be on a higher footing than even secured financial creditors like banks. This would be tantamount to turning the IBC on its head. Currently, the govt dues are classified as operational dues and gets priority after banks.
Additionally, the Supreme Court may pronounce its verdict on the time frame for a staggered repayment of telecom companies' AGR dues. It had ruled in favour of the government upholding the Department of Telecom's definition of AGR. Click here for a detailed timeline on the issue.
For Bharti Airtel, the total AGR demand came in at Rs 43,980 crore of which the telco has so far paid Rs 18,004 crore. It is now seeking a 15-year timeline to pay the remaining Rs 25,976 crore. For Vodafone Idea, the total AGR demand came in at Rs 58,254 crore with the company so far clearing Rs 7,854 crore. Like Bharti Airtel, it is also seeking at least a 15-year timeline to clear the remaining Rs 50,400 crore dues.
Tata Teleservices' total AGR dues stand at 16,798, of which the company has so far paid Rs 4197 crore. The remaining balance AGR due to be paid is Rs 12,601 crore. Reliance Jio, being a recent player in the telecom space, was required to pay 70.53 crore and it has already paid Rs 195 crore based on its self-assessment of Rs 194.7 crore.