The Supreme Court upheld the Department of Telecommunications’ AGR definition, obligating telecom companies to pay Rs 92,642 crore. Disputes over revenue inclusions continue, with telcos facing massive liabilities. The government is exploring relief mechanisms, including a 75% waiver of dues, to prevent sector collapse and ensure service continuity.
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The Supreme Court has upheld the definition of Adjusted Gross Revenue (AGR) calculation as specified by the Department of Telecommunications.
The Supreme Court (SC) dismissed review petitions filed by telecom companies (telcos) like Vodafone Idea and Bharti Airtel, and upholding the Department of Telecommunications (DoT) definition of Adjusted Gross Revenue (AGR).
The court made it clear that telcos must pay Rs 92,642 crore to the government, with Airtel and Vodafone owing over half the amount.
The court rejected claims of “glaring errors” in DoT’s calculations, stating telcos must cover original dues, interest, and penalties for delayed payments.
AGR is the revenue-sharing fee telcos pay to the government, it is split into:
The current dispute centres on what revenue sources count toward AGR. DoT argues that AGR includes all income (e.g., interest, asset sales, forex gains), while telcos insist it should exclude non-telecom earnings (e.g., rent, dividends).
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Background of the Dispute 1999: The Union government switched from a fixed licence fee model to a revenue-sharing model, requiring telecom operators to pay a percentage of their AGR in licensing fees and SUC. 2003: The Department of Telecommunications (DoT) expanded its demand for AGR payments, including non-telecom profits in the calculation. 2005: The Cellular Operators Association of India (COAI) first challenged DoT’s AGR definition. 2015: The Telecom Disputes Settlement Appellate Tribunal (TDSAT) ruled that AGR excludes capital receipts and non-core income (e.g., asset sales, forex gains) but includes interest and dividends. 2019: The SC widened AGR’s scope, pushing telcos to pay dues based on all revenue, including non-telecom sources. This led to massive liabilities—over Rs 1.47 lakh crore in total AGR dues, with Rs 92,642 crore for license fees. 2020–2023: Telcos sought corrections to DoT’s calculations, claiming overpayment and errors. The SC dismissed these appeals, citing “frivolous” arguments. |
Vodafone Idea: DoT calculates its dues at Rs 58,000 crore, but the company self-assesses at Rs 21,500 crore. The SC’s ruling pushes it closer to financial collapse.
Bharti Airtel: DoT’s calculation is Rs 43,980 crore, v/s Airtel’s self-assessed Rs 13,000 crore. Airtel is better positioned to pay but still faces strain
Total Dues: Of the Rs 1.47 lakh crore AGR dues, Rs 92,642 crore is for license fees, and Rs 55,054 crore for spectrum charges.
Moratorium: Telcos were granted a four-year moratorium on AGR payments (ending October 2025). Annual installments resume in 2026.
Proposed Relief Package: The government is considering waiving 75% of dues (penalties, interest, and interest on penalties), potentially reducing the burden by Rs 90,000 crore.
TRAI’s Recommendations: The Telecom Regulatory Authority of India (TRAI) supports excluding non-telecom income (e.g., dividends, forex gains) from AGR calculations, aligning with TDSAT’s 2015 ruling.
Sector Viability: Telcos argue excessive AGR dues threaten industry survival, especially for debt-ridden firms like Vodafone Idea.
Consumer Impact: If telcos collapse, India risks losing network coverage and jobs, destabilizing one of Asia’s largest telecom markets.
Government Dilemma: Waiving dues may strain public finances but is critical to prevent sector-wide defaults.
Telcos have exhausted legal options and now rely on government relief.
The Cabinet is expected to decide on the relief package soon, likely in the 2025–26 Union Budget.
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THE ADJUSTED GROSS REVENUE (AGR)
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PRACTICE QUESTION Q. Critically analyze the Supreme Court’s ruling on Adjusted Gross Revenue (AGR) and its legal implications for telecom companies. 150 words |
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