“While most of the licensees of DoT were not direct party to the dispute, the ratio of the judgement will be applicable on all the licensees,” said communications minister Ravi Shankar Prasad, answering a question in the Lok Sabha on Wednesday. This is the first time the government has confirmed that the apex court’s ruling on the definition of AGR will also impact non-telecom companies, which may leave the firms that have telecom licences having to pay in excess of Rs 2 lakh crore, according to one estimate.
According to the DoT website, there are 3,468 telecom licensees across the country, including Power Grid, GAIL, Airports Authority of India, the National Stock Exchange, Ministry of Home Affairs, Cabinet Secretariat, Delhi Metro Rail Corp, NTPC, ONGC and Rail-Tel, among others. Many companies hold multiple types of licences under the same name. The minister did not specify the amount due on this account, while giving a list of licence holders in Karnataka.
On October 24, the Supreme Court decided in favour of the government’s contention that all revenue, including from non-core sources, would count as gross revenue for calculating AGR. The court mandated compliance with the order in three months or January end.
Licence holders have to pay about 8% of AGR to the DoT as fees. While the telecom companies that were directly party to the case owe the government about Rs 1.47 lakh crore — most of it owed by Bharti Airtel and Vodafone Idea — the industry estimates that non-telecom companies may have to pay about Rs 2.28 lakh crore, calculated since the time they got their respective licences.
These licences that non-telecom companies have are for services such as internet access, national long distance calls, international long distance calls, V-Sat and captive services among others. Until now, they have been paying little by way of licence fees since revenue from telecom services was marginal.
For instance, state-run Power Grid gets 2% of its revenue from telecom services while power transmission accounts for nearly 95%. The company made Rs 742 crore in FY19 from its telecom business, putting its licence fee payment at Rs 59 crore. But under the expanded definition as per the October verdict, AGR would include all of its FY19 revenue, which is Rs 35,661 crore.
DoT on its part has already issued notices to all licence holders for their own fee assessment following the verdict and asked them to pay the amount within the stipulated time frame, even as it has sought legal opinion on how to deal with non-telecom companies.
Bharti Airtel has told DoT that all telecom licence holders, even if they were non-telecom companies, should be treated at par with the mobile phone companies while seeking additional licence fees. Bharti Airtel has estimated that PGCIL could be liable to pay an additional Rs 43,544 crore in licence fees, interest, penalty and interest on penalty.
A lobby group representing internet service providers (ISPs) has already written to the Prime Minister’s Office seeking its urgent intervention as any move to seek dues would have “serious financial implications” on oil and gas companies, power producers, the railways, data centres and others that have obtained telecom licences but were not part of the litigation involving telcos. This will lead to a “financial crisis in many small and medium ISPs that have operations in rural areas,” it has said. The Internet Service Providers Association of India has also sought a legal opinion on the applicability of the Supreme Court order on ISPs.
Read More News on
Download The Economic Times News App to get Daily Market Updates & Live Business News.
4 Comments on this Story
Prasad Vellangil James412 days ago
Based on the new calculations of AGR they have to pay based on the total revenue or otherwise they should exit the telecom business.
Kavi Tanna413 days ago
This does not seem reasonable at all.
vikas rander413 days ago
Companies like Gail, power grid will go bank crypt if this order is implemented. This order need to be reversed by the parliament. Time to buy vodafone