Telcos move SC on AGR issue

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New Delhi | Published: August 11, 2015 1:19:44 AM

The telecom companies argued that inclusion of non-telecom revenue in calculation of AGR would have a negative impact on their financials, and also increase the burden on the consumer

Telecom operators  —  Bharti Airtel, Vodafone and others —  on Monday moved the Supreme Court against the TDSAT’s order that ruled that certain non-telecom revenues like rent, profit on sale of fixed assets, dividend and treasury income would be counted as adjusted gross revenue (AGR), on which licence fee would have to be paid to the government.

The Telecom Disputes Settlement and Appellate Tribunal ruling exempted a large number of streams from the definition of AGR, like capital receipts, bad debt, distribution margins to dealers, forex fluctuations, sale of scrap and waiver of late fee. The telecom tribunal also said revenue from non-core sources such as rent, profit on sale of fixed assets, dividend, interest and miscellaneous income must be included while computing a carrier’s AGR, dealing a setback to telecom operators who would have to shell out more towards licence and spectrum usage fees.

A bench headed by Justice MY Eqbal adjourned the matter for September 8 after Attorney General Mukul Rohatgi told the bench that the government has also filed a counter appeal against a part of the TDSAT order that quashed all previous demand notices issued by the telecom department and the same should be heard along with the appeals filed by the telecom companies. The tribunal had also asked DoT to issue fresh notices based on the revised calculations.

The telecom companies argued that inclusion of non-telecom revenue in calculation of AGR would have a negative impact on their financials, and also increase the burden on the consumer. They further said that the definition of licence agreement was broad and already covers non-core revenue.

While the mobile operators have been arguing that revenue arising out of rendering only telecom services should comprise AGR, DoT says it should include all revenue earned by a service provider, including from corporate receipts, handset sales, real-estate transactions and interest earned on bank deposits.

Mobile operators pay 8% of their AGR as licence fee to the government. Earlier, the Supreme Court had ruled that ideally any revenue generated through a company formed for the purpose of providing telecom services should be counted as revenue on which licence fee should be paid.

However, the SC had said that since each component would require interpretation, the operators were free to approach the TDSAT.

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