Earlier, on July 20 it had reserved the order in the matter relating to timeline in which operators like Bharti Airtel and Vodafone Idea are required to pay their AGR dues.
In what could put the resolution process of insolvent telecom operators like Reliance Communications and Aircel in jeopardy, the Supreme Court on Monday said that the government should move to cancel their licences and spectrum if their statutory dues (read adjusted gross revenue) are being wiped out.
The apex court, which is examining whether the spectrum held by the operators can be monetised through the insolvency process, despite it being the property of the government, observed, “How can you sell somebody else’s property? This will allow for dues to be wiped out, new party will take over free of all encumbrances, liabilities. Wiping out of government dues in this fashion is not permissible. What is being proposed is like you renting out your house to a tenant, and the tenant selling your house under IBC. Spectrum if cancelled will have to be surrendered to department of telecommunications, which may be auctioned for higher realisation”.
The SC has reserved the order in the matter. Earlier, on July 20 it had reserved the order in the matter relating to timeline in which operators like Bharti Airtel and Vodafone Idea are required to pay their AGR dues. The companies have sought a 15-20 year to pay the dues.
Whether telecom operators like Reliance Jio and Bharti Airtel which have traded a portion of spectrum from Reliance Communications and Aircel and Videocon Telecommunications, respectively, need to pay the AGR dues on their behalf, the DoT said that trading guidelines allow it to recover unknown dues from either party. However, it said that a Telecom Disputes Settlement and Appellate Tribunal’s order of February, 2019, not interfered by the SC, has constrained it from recovering past dues from the buyer. “It is submitted that if and when, this hon’ble court is pleased to lay down the principle either in the context of traded spectrum or shared spectrum and the liability to make payment, the DoT will compute as per the principle laid down by this hon’ble court and take steps accordingly,” the DoT told the SC.
The DoT also said that the current AGR dues are only till 2016-17 and therefore does not take into account the AGR dues arising out of the traded spectrum by Jio and Airtel as the trade happened around that period. It said that it is computing the dues post 2016-17, which would include the liabilities of the traded spectrum and present before the court. The spectrum sharing and trading guidelines had come in 2015 and the Jio and Airtel trade took place in 2016.
Jio had acquired 47.50 MHz spectrum from Rcom in the 800 MHz through trade in 2016. The same year, Airtel acquired 160 MHz of spectrum in 2300 MHz band from Aircel, and 30 MHz in the 1800 MHz band from Videocon.
The AGR dues of RCom stands at Rs 25,199.27 crore while that of Aircel is Rs 12,389 crore. If Jio and Airtel are made to pay for the traded spectrum their liability could be around Rs 13,000 crore and Rs 2,000 crore respectively.
The senior counsel for Jio as well as the committee of creditors of RCom, Harish Salve, said that operators do not own spectrum but have right to use it and transfer it. According to it, spectrum can be transferred through IBC and it’s not the court’s mandate to approve or disapprove it. Salve said that the permission to transfer spectrum is accorded by DoT and when that stage comes the government can negotiate for payments etc based on its commercial wisdom. This view was endorsed by counsel for Aircel’s CoC, Ranjit Kumar.
On behalf of Airtel, senior advocate Kapil Sibal said that the DoT has not raised any AGR demand on the company for the spectrum acquired by Aircel and Videocon. He said that the company has been paying AGR since it acquired the spectrum through trade and if the DoT now raises any demand for past dues, Airtel has the right to challenge it in the TDSAT.