Current Affairs

Adjusted Gross Revenue

The Supreme Court has allowed the telecom companies 10 years’ time to pay their adjusted gross revenue (AGR) dues to the government.

How will the payment be made?

  • The telecom operators would make the payment of 10% of the total dues as demanded by Department of Telecom by March 31, 2021.
  • The yearly instalments would commence from April 1, 2021, up to March 31, 2031. The instalments would be paid by March 31 every year.
  • The managing director/ chairman or other authorised officer should give an undertaking within four weeks, to make payment of arrears.
  • The telcos shall keep alive the existing bank guarantees they had submitted regarding the spectrum until the payment is made.
  • In the event of any default, interest would become payable along with penalty and interest on penalty without reference to court. Besides, it would be punishable for contempt of court. Compliance should be reported every year on April 7.

About AGR

  • Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
  • It is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent respectively.
  • As per DoT, the charges are calculated based on all revenues earned by a telco – including non-telecom related sources such as deposit interests and asset sales. Telcos, on their part, insist that AGR should comprise only the revenues generated from telecom services.
  • In 2015, Telecom Disputes Settlement and Appellate Tribunal ruled that the companies’ definition is right. However, in October 2019, the Supreme Court set aside the tribunal’s judgement saying government definition is right.

Supreme Court Judgement

  • The Supreme Court has upheld the definition of Adjusted Gross Revenue (AGR) calculation as stipulated by the Department of Telecommunications.
  • This means that telecom companies will have to pay up as much as Rs 92,642 crore to the government, more than half of which are owed by Airtel and Vodafone.
  • Terming the issues raised by telcos with respect to AGR as ‘frivolous’, the SC held that not only the original charges, but principal interest and penalties on delayed payments would also be payable.