Supreme Court dismisses telcos' definition of AGR, upholds all dues payable to govt

The Supreme Court has upheld the definition of Adjusted Gross Revenue (AGR) calculation as stipulated by the Department of Telecommunications.

Terming the issues raised by telcos with respect to AGR as ‘frivolous’, the SC has further held that not only the original charges, but principal interest and penalties on delayed payments would also be payable.

The Apex Court has said that all revenues accruing to telecom operators would constitute AGR. It added that revenues gained from termination fees and roaming charges would also be included in AGR.

Telcos on their part have sought a six month computation period for amounts that would now be payable after the SC verdict.

Reacting to the verdict, Mahesh Uppal, Director at ComFirst India told CNBC-TV18 that it is within the government’s rights to offer new terms of payments to telcos. He, however, added that stressed companies such as Bharti Airtel would find it difficult to “take this judgement in their stride”.

Sanjay Kapoor, former CEO - India and South Asia at Airtel said the company is better placed as compared to other incumbents but added that all balance sheets will be under severe pressure and there is a structural problem with the way the telecom industry is functioning.

Also Read: Explainer: SC's decision on adjusted gross revenue to lead to Rs 92,000 crore hit for telcos

AGR is the usage and licensing fee that telecom operators are charged by the DoT. It is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent respectively.

As per DoT, the charges are calculated based on all revenues earned by a telco – including non-telecom related sources such as deposit interests and asset sales. Telcos, on their part, insist that AGR should comprise only the revenues generated from telecom services.