Looking for solution: Sunil Mittal, KM Birla meet FM Sitharaman as AGR crisis looms

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Published: February 20, 2020 2:15:02 AM

Apart from paying Rs 2,500 crore on Monday, Vodafone Idea has said that it would pay another Rs 1,000 crore before the end of the week.

Emerging from the meeting, Mittal said the telecom sector has been under stress for the last three-and-a-half years and the government should focus on its sustainability. Emerging from the meeting, Mittal said the telecom sector has been under stress for the last three-and-a-half years and the government should focus on its sustainability.

Even as the department of telecommunications (DoT) and telecom operators struggle to find a solution to the payment of adjusted gross revenue (AGR) dues, Sunil Bharti Mittal, chairman of Bharti Group, and Kumar Mangalam Birla, chairman of Vodafone Idea, met finance minister Nirmala Sitharaman on Wednesday.

Though neither spoke anything specific regarding what was discussed in the meeting, what is increasingly becoming clear is that various departments of the government are engaged in looking for a solution which is seen in compliance of the Supreme Court order as well as provides some relief to the telecom sector.

It can also be inferred from the meetings that the government may offer some sops to the operators in terms of cut in licence fee and spectrum usage charge (SUC) in lieu of the AGR payments they make. Some other financial relief measures could also be worked out.

Emerging from the meeting, Mittal said the telecom sector has been under stress for the last three-and-a-half years and the government should focus on its sustainability. He said that the issue of pending dues arising out of the SC ruling on AGR was not discussed. The telecom industry, he said, is vital to the nation and the digital agenda of the government.

“The only thing government needs to do is to focus on how to ensure sustainability of the sector,” he said without elaborating.

He said Bharti Airtel has already announced its plans to pay the dues that arose from the apex court ruling.

As is known, Bharti Airtel has paid Rs 10,000 crore out of its estimated liability of over Rs 35,586 crore. It has also said that it will pay the balance, after reassessment, before March 17.

Earlier in the day, Mittal also met DoT secretary Anshu Prakash.

As reported earlier, the government is so far undecided whether to go ahead and encash the bank guarantees of the telecom operators who have not paid up fully despite the SC’s order and notices of DoT.

The biggest predicament facing the DoT is over the steps to be taken with regard to Vodafone Idea, which needs to pay the maximum – Rs 53,039 crore – but has so far paid only Rs 2,500 crore.

On Tuesday, Birla had met DoT secretary Prakash to explore the options to keep the company afloat.

Apart from paying Rs 2,500 crore on Monday, Vodafone Idea has said that it would pay another Rs 1,000 crore before the end of the week. It has again reiterated that its viability depends upon relief on the AGR matter.

Sources said DoT officials are in a fix over the next course of action because they do not want to be caught on the wrong foot this time. On January 23, the DoT had issued orders to its field offices not to take any coercive action against the operators which enraged the SC, which has issued contempt notices against the official.

The DoT and its officials do not want to do anything which irks the SC at the next hearing on March 17. If they encash the bank guarantee of Vodafone Idea, it would mean closure of the company which would mean the government also losing over Rs 2 lakh crore by way of other dues like deferred spectrum instalments and banks will take a hit of around Rs 50,000 crore.

The other problem is that if bank guarantees have to be encashed, whether these should be done only for Vodafone Idea or even Bharti Airtel. Though Bharti Airtel on Monday paid Rs 10,000 crore of its total Rs 35,584 crore dues, and said that it will pay the balance after reassessment before March 17, technically it has not paid the full amount so any decision on encashment of bank guarantee should apply to it as well.

There’s also the possibility of disputes between the operators and DoT over the amount to be paid, with the former coming up with a lower amount for the dues. What happens if they pay the self-calculated lower amount and claim that the entire payment has been made by them? Sources said in that case it can be interpreted by both parties that they are in compliance with the SC order and the disputed amount will figure as a separate matter.

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