AGR: Supreme Court verdict to be a colossal fall for telecom sector, says consumer group

ET Telecom, March 22, 2020

The Supreme Court’s October last verdict followed by its stand on March 18 on the adjusted gross revenue (AGR) asking telcos to pay outstanding worth Rs 92,000 crore, would trigger a ‘gargantuan fall’ in the telecom sector, and the ruling has apparently overlooked the larger economy as well as job loss and consumer interest issues, a consumer rights group said.

“The Supreme Court seems to be unrelenting to the larger issues looming the economy, including job losses and consumers interest while the government by proposing staggered payment of adjusted gross revenue (AGR) dues over 20 years period is protecting whatever little competition has remained in the telecom sector, Pradeep S. Mehta, Secretary General, CUTS International said.

Mehta’s comments have come on the backdrop of the top court’s inclination on its October decision on AGR matter asking companies to pay their long-standing dues to the Department of Telecommunications (DoT), and further slammed the telecom companies and the Centre for undertaking a self-assessment or reassessment exercise.

However, human resource (HR) analysts said that as many as 40,000 job cuts are expected in the telecom sector during the current crisis.

The court in its late last year upheld the DoT’s demand and asked telecom operators to pay Rs. 92,000 crores in overdue levies and interest. Financially struggling Vodafone Idea has a maximum liability of Rs 53.000 crore while Bharti Airtel owes Rs 35,000 crore.

In its March 18 hearing, a bench of Justices Arun Mishra, MR Shah and SA Nazeer declined to entertain the government’s plea for allowing telcos to pay

AGR dues in 20 years, and said that the application would be taken up separately after two weeks.

Following the court’s stand, Vodafone Idea’s business survival is becoming quite difficult, according to industry analysts.

On fears of probable exit of a major player Vodafone Idea, Mehta said, “Functioning of all the four telecom operators, is vital for healthy competition in the telecom sector.”

Vodafone Idea, Bharti Airtel and Tata Teleservices have so far partially paid their dues to the government as per their internal assessment.

“It is hoped that the apex court, while it is right, could seriously consider the Centre’s proposal of staggered payment in its next hearing but the higher courts should be sensitive to economic and consumer impact that their judgements could ensue,” he said.

“Given that public sector firms in the telecom sector are nearly decimated, the impact of Supreme Court’s decision will be a gargantuan fall in the sector which cannot be contained by other players in their current capacity” Mehta added.

CUTS International or the Consumer Unity & Trust Society is a non-profit organisation that focusses on consumer protection, economic policies, competition laws, human development, regulatory issues and social change.

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