Bharti Airtel, Vodafone Idea and Tata Telecom on Thursday told the Indian Supreme Court that they could not furnish bank guarantees or security against their remaining adjusted gross revenue (AGR) related dues, and requested the court to allow staggered AGR payments over 20 years.
The Supreme Court has directed these telcos to submit reasonable payment plans, including securities and collaterals, to qualify for staggered payment of AGR dues. It has asked the Department of Telecommunications (DoT) to look into the payment proposals.
The Court said that it has also requested telecom companies to make payments of a reasonable amount to show their bona fides, before the next date of hearing, scheduled for the third week of July.
During the hearing, cash-strapped telecom operator Vodafone Idea informed the court that Rs 15,000 crore ($1.97 billion) bank guarantees and specific securities are lying with the Department of Telecommunications (DoT). It also informed the court that it incurred Rs 1 lakh crore ($13.16 billion) in losses and has no funds to pay. “We are barely afloat, and only way is to earn and pay,” Vodafone Idea lawyer Mukul Rohatgi said during the hearing.
Vodafone Idea, which owes Rs 58,254 crore or $7.6 billion towards AGR-related dues, has paid nearly Rs 7,000 crore ($921.05 million).
Airtel, in its affidavit, said that Rs 10,800 crores ($1.42 billion) worth of bank guarantees are also available and lying with the DoT and can be used security for amounts due. It claimed to have deposited a sum of Rs 18,000 crore ($2.37 billion) out of Rs 21,000 crore ($2.76 billion) AGR dues.
Airtel said that Bharti Group companies have paid substantial sums in compliance with the October 2019 judgment and is now fully willing to pay whatever amounts are required to be paid in accordance with the order.
“While the EBITDA of the Bharti Companies is more than adequate to meet the dues, the Bharti Companies are humbly requesting this Hon’ble Court to grant a time period of 20 years. This will enable the Bharti Companies to ensure that they also continue to make capital expenditures to support the vision of digital India and allow the customers to have a choice of competing players to deliver services,” Airtel said in its affidavit.
The Sunil Mittal-led operator said that the telecom business has a high capital expenditure intensity, which requires operators to invest substantial sums of money every year continuously.
Tata Telecom said that it had paid Rs 6,504 crore in AGR dues so far. The company’s lawyer Arvind Datar said that furnishing a bank guarantee may adversely impact investments in the sector.
The Supreme Court bench comprising Justices Arun Mishra, S. Abdul Nazeer, and M.R. Shah ordered Bharti Airtel, Vodafone Idea and Tata Teleservices to submit their audited balance sheets of the past ten years.
The bench also noted that the DoT has withdrawn 96% of the over Rs4 lakh crore ($52.63 billion) claims levied against public sector units (PSUs).
The DoT had previously sought a total of Rs 4 lakh crore in dues from gas utility GAIL India Ltd (Rs1.72 lakh crore or $22.63 billion), electricity transmission firm PowerGrid (Rs 22,062.65 crore or $2.9 billion), Oil India Ltd (Rs 48,489.26 crore or $6.38 billion), Delhi Metro Rail Corporation (Rs 5,481.52 crore or $721.25 million) and Gujarat Narmada Valley Fertilizers and Chemicals (Rs 15,019.97 crore or $1.98 billion) among others against their telecom licenses following the Supreme Court’s October 2019 decision on AGR definition.