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Relief in the works for AGR-hit telecom companies

The development comes a day after the DoT issued notices to telcos to pay their remaining AGR dues without any further delay, increasing pressure on Vodafone Idea. The DoT also wrote to telcos seeking details and explanations for their self-assessment, needed for the government to reconcile the amounts with its calculations.

ET Bureau|
Last Updated: Mar 06, 2020, 01.27 PM IST
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NEW DELHI: The government is working on steps to provide relief to the telecom sector that will need to be ratified by the Cabinet, a senior official said, raising the prospect of a possible reprieve for financially strapped Vodafone Idea, which faces adjusted gross revenue (AGR) dues of Rs 53,000 crore. On the eve of Vodafone Group CEO Nick Read’s visit to India, the official said any package will need to conform to the Supreme Court’s AGR ruling. The next hearing is on March 17.

“Any decision will have to be cleared by the Cabinet. The government’s intent is clear — it does not want any company to close down,” the official told ET. “However, the relief will be for everyone, not just Vodafone Idea.”

Vodafone Idea, a JV between Vodafone Group and Aditya Birla Group, is the most precariously placed of the operating telcos, facing AGR dues of Rs 53,000 crore as estimated by telecom department.

‘Relief Steps Not Finalised Yet’
The company has said it will have to shut if it doesn’t get any relief on its AGR dues or if its bank guarantees are invoked to recover part of the amount. Its own assessment has pegged AGR dues at around Rs 23,000 crore, of which Rs 7,000 crore is the principal. The telco has so far paid only Rs 3,500 crore.

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The official said that no relief steps have been finalised as yet.

Among the options being discussed are relief on non-AGR dues such as licence fees and spectrum usage charges (SUC).

Vodafone Idea and Bharti Airtel, which face combined AGR dues of over Rs 90,000 crore according to DoT’s estimates, have proposed spreading payment of at least the interest and penalty component over several years. This comprises about 75% of the overall dues. A fund that will provide funds to stressed telcos to pay AGR dues has also been mooted.

A Telecom Commission meeting on the issue last week was believed to have been inconclusive. The government has repeatedly said that it wants three viable private telecom operators and wouldn’t want a monopoly in the sector.

DoT notices to telcos
The development comes a day after the DoT issued notices to telcos to pay their remaining AGR dues without any further delay, increasing pressure on Vodafone Idea. The DoT also wrote to telcos seeking details and explanations for their self-assessment, needed for the government to reconcile the amounts with its calculations.

“This was a normal letter, seeking some details. It wasn’t any threat to the telcos,” the official said.

Against DoT’s estimated dues of over Rs 35,500 crore for Airtel and nearly Rs 14,000 crore for Tata Teleservices, the two have paid Rs 13,004 crore and Rs 2,197 crore, respectively. This is what they owe in full, according to their own calculations. They have also deposited Rs 5,000 crore and Rs 2,000 crore, respectively, as a buffer to account for DoT’s reconciliation of dues.

The payments were made before the next court hearing on modification pleas filed by the telecom companies scheduled for March 17. The telcos have sought to be allowed to negotiate modalities and timelines for payment with the DoT.

At the previous hearing, the court had lashed out at telecom companies for not paying their dues by the initial deadline of January 23, and at the DoT for issuing a circular calling on its officers not to take any coercive action till the next hearing.
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