Today, On 15th July, Vodafone Idea urgently seeks a Supreme Court hearing on its revenue dues. The company aims to raise debt funding to pay its dues, but lenders need clarity on the exact liability. The Department of Telecommunications demands Rs.58,254 crore, while Vodafone Idea assesses its dues at Rs.21,533 crore.
New Delhi: Vodafone Idea Ltd (Vi) urged the Supreme Court for an urgent hearing of its curative petition against a previous ruling regarding its adjusted gross revenue (AGR) dues. Chief Justice D.Y. Chandrachud assured that a decision on the listing would be made soon.
Representing Vodafone Idea, Senior advocate Harish Salve stated,
“The company seeks to raise debt funding to settle its dues, but clarity on the exact liability is required by potential lenders.”
Salve mentioned that the petition filed last year and argued that the Department of Telecommunications (DoT) made errors in calculating the final demand, without giving Vodafone Idea a proper hearing before imposing the penalty.
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Telecom operators mandated to pay a percentage of their adjusted gross revenue as an annual license fee to the government, making the definition of AGR crucial for their financial health. Salve also highlighted Vodafone Idea’s restructuring, including converting government dues to equity, which made the Indian government the largest shareholder with over a 32% stake.
Both Bharti Airtel Ltd and Vodafone Idea submitted curative petitions in September, challenging the Supreme Court’s order from 1 September 2020, which required telecom companies to pay their AGR dues over a 10-year period. In July 2021, the Supreme Court dismissed a plea to correct the demand of AGR dues, despite telecom companies’ claims of multiple errors in the computation, amounting to more than Rs.1 trillion.
In its plea, Vodafone Idea raised concerns about its financial crisis, noting that the AGR demands exceeded the principal amount and asserting that it disputed the revenue definitions in good faith.
The 2020 ruling required telecom companies to pay 10% of their dues upfront by 31 March 2021, with the remaining amount to be paid annually until 2031. Any default would result in interest, penalties, and contempt of court charges.
The DoT estimated Airtel’s AGR dues at Rs.43,980 crore, while Airtel’s own estimate Rs.13,004 crore. For Vodafone Idea, the DoT’s demand Rs.58,254 crore, compared to the company’s assessment of Rs.21,533 crore. Tata Teleservices faced a demand of Rs.16,798 crore, whereas its calculation Rs.2,197 crore.
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The issue dates back to the National Telecom Policy (NTP) of 1999, which required telecom companies to pay license and spectrum fees as a percentage of their annual income. Disputes arose over the definition of gross revenue, with telecom companies arguing that AGR should include only income from telecommunication activities, while the DoT advocated for a broader definition encompassing all revenue.
In 2015, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruled that AGR should be based solely on revenue from telecommunication services. However, in 2019, the Supreme Court decided that AGR should be based on a company’s total revenue, allowing the Centre to recover about Rs.92,000 crore from the companies.
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