Policy | The government should not succumb to pressure tactics by incumbent telecom players

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26 Aug, 2025 12:21

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In what appears to be a blatant attempt to arm-twist the government to waive part of the recent penalties imposed on the company by the Supreme Court, Bharti Airtel has deferred its second-quarter results to November 14, 2019. The official reason given, of course, is that it seeks more clarity on issues relating to the recent Supreme Court's direction on the definition of adjusted gross revenue (AGR).

On the other hand, the company’s Chairman Sunil Bharti Mittal sought to meet the telecom minister in the hope for a possible relief in the form of a waiver of penalties and interest. Reports say the Vodafone Idea management has been crying hoarse over the company’s fragile financial position to whoever will listen, including the government.

The telecom industry is crying over spilt milk. The case has been going on since October 11, 2011, when the Supreme Court held that TRAI and TDSAT cannot define Adjusted Gross Revenue (AGR), and ruled out any relaxations after telecom service providers signed the licences.

The court had made it very clear that the tribunal can only look at the computation of demands raised by DoT and whether it was as per the licence agreement or not.

The telecom operators had a chance to pay up the amount and align themselves with the court ruling. The CAG audit report for the period 2006-07 to 2009-10, as mentioned by Anil Kumar in his article on Moneycontrol, had put the total unpaid dues of six private telecom service providers on account of licence fees and spectrum usage charges (SUC) at Rs 5,213 crore at that time.

Bharti Airtel had dues of only Rs 1,067 crore while Vodafone had Rs 750 crore while that of Idea Cellular was Rs 423 crore. Vodafone and Idea subsequently merged. This amount has now shot up to over Rs 70,000 crore, inclusive of penalties.

The telecom companies are clearly to be blamed for the increase in amount rather than the Supreme Court and the government, as is being made out by these companies and their trade association.

In its order, the Supreme Court has observed that “Parties understood right from the beginning that the gross revenue does not exclude discounts, commissions, rebate etc. and specific challenge made to the same had not been accepted in 2011. Now, once again by the circuitous method, an impermissible attempt has been made to rewrite the definition of gross revenue.”

Instead of paying up their dues, the telecom operators tried every trick in the book to delay the payment. Many players went bust without paying the rightful fees to the government. The ones that are remaining had enough opportunity to provide for this amount in their books, which would have been the prudent thing to do and would have laid bare the real position of their balance sheets to their investors. But, rather than being prudent in their policy, the companies are now running to the minister seeking relief. Bharti Airtel has made part-provision for the amount it has been asked to pay.

While on the one hand, the telecom operators want relief, on the other, they are trying to blackmail the government into meeting their demands.

Media reports say the Cellular Operators Association of India (COAI) is using this opportunity to tell the government that there would be no takers for its 5G auctions if the players have to cough up the money as mentioned by the Supreme Court. The government should call their bluff, as not participating in the 5G auction would only make matters worse for these players.

The government should see through the game plan of these companies who have used the legal system to delay paying the fee and now when they are being asked to pay the fees and the penalties are trying to arm-twist the government into submission.

Any reduction of the amounts due would be nothing less than moral hazard. It would be an indication that the government is willing to succumb to pressure tactics and prop up inefficient players. If the government succumbs in this case, there would be cries to extend the precedent to other inefficient players in other sectors as well. The implications could be very serious.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol