Why in News ?
The Supreme Court on Tuesday allowed telecom companies 10 years’ time to pay their adjusted gross revenue
(AGR) dues to the government. Adjusted Gross Revenue For Telcos increases the stress of Telecom operators.
What is AGR
The usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
- The AGR is divided into spectrum usage charges and licensing fees between 3-5% and 8% respectively.
- Calculation of charges :
- All revenues earned by a telcos.
- Besides non-telecom related sources such as deposit interests and asset sales.
- Except capital receipts
- Suggestion by Telcos
- Adjusted Gross Revenue For Telcos should comprise only the revenues generated from telecom services. Exclude non-telecom revenue sources for AGR.
- However Supreme Court verdict on 24th October 2019 upheld the definition of ‘Adjusted gross revenue'(AGR) as interpreted by the Government.
- Importance of AGR Defenition
- For calculating the two charges levied on the Telecom operators by the Government
- License fee
- Spectrum usage charges
- For calculating the two charges levied on the Telecom operators by the Government
Government Proposal for the issue
- The government had proposed in court a 20 year for telcos to make staggered payments of the dues.
- In previous judgement of the court wanted the telcos to make the repayments in three months an amount nearly Rs.1.4 lakh crores.
- The telecom operators would make the payment of 10% of the total dues as demanded by Department of
Telecom by March 31, 2021. - The payment should be paid based on instalment every year by March 31.
- The telcos shall keep alive the existing bank guarantees they had submitted regarding the spectrum until
the payment is made.
Reason for Teleos Stress
- Repayment of AGR : For the last 14 years AGR definition was under litigation. Intially it was a small amount of 23,189 crores turned into a sum of Rs.1.4 lakh crores (License fees due- Rs.92640 crores; SUC due- Rs.46000 crores. Total- Rs.1.4 lakh crores)
- This interest on the basic dues not paid, penalties on delayed payment and interest on penalties not paid.
- Significant payment was pending by Vodafone and Airtel.
- 2G License cancellation by SC : 2G scam leads the Supreme Court arbitrarily cancelled all the licenses and ordered fresh auctions in 2012.
- The recent competition by the new network operators.
Government Intervention to tackle stress
Committee of secretaries were recently announced by the government. Committee the representative of Ministry of Finance, Law and Telcom to recommend measures to mitigate financial stress in the Telecom sector.
Source : The Hindu
Topic
GS II : Government policies and interventions for development in various sectors and issues arising out of their design and implementation
Current Affairs Compilation : 2 September 2020