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Telcos seek open court hearing on AGR

Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Telcos seek open court hearing on AGR

What to study?

For Prelims: What is AGR? How is it calculated?

For Mains: What is the impact of latest ruling? Issues and ways to address them.

Context: Telecom companies, including Bharti Airtel and Vodafone Idea, have urged an open court hearing of their petitions seeking a review of a Supreme Court judgment upholding the recovery of past dues amounting to ₹1.47 lakh crore from them.

What is the issue?

  • On October 24 last year, dealing a huge blow to telecom service providers, the Court had upheld the Department of Telecom’s (DoT) move to recover AGR of about ₹92,000 crore from the telcos.
  • The Court dismissed the telecom service providers’ objection to the government’s formulation of AGR.

What is AGR?

It 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.

The judgment had said that the gross revenue would be inclusive of installation charges, late fees, sale proceeds of handsets (or any other terminal equipment etc.), revenue on account of interest, dividend, value-added services, supplementary services, access or interconnection charges, roaming charges, revenue from permissible sharing of infrastructure and any other miscellaneous revenue, without any set-off for related item of expense, etc.

Why the Court had upheld DOT’s move?- Observations made by the Court:

  • The telecom sector had long reaped the fruits of the Centre’s liberalised mode of payment by revenue sharing regime.
  • The sector has benefited immensely under the scheme as apparent from the gross revenue trend from 2004 to 2015.
  • But, the service providers had failed to fulfil their obligations to the government and raised frivolous objections.

Sources: the Hindu.