The SC also expressed doubts over Vodafone Idea's capacity to clear the dues, repeatedly asking how it would secure the payment if it goes into liquidation given its financial condition.
The Supreme Court on Monday reserved its order on the time to be granted to telecom operators Bharti Airtel, Vodafone Idea, and Tata Teleservices to pay their adjusted gross revenue (AGR) dues. Interestingly, while the department of telecommunications maintained the companies be given a 20-year period to pay their dues, Bharti Airtel and Vodafone Idea were comfortable with a 15-year period, while Tata Teleservices said it was comfortable with a 7-10 year period.
Telcos also won a reprieve as DoT did not press for any additional guarantees and securities saying the bank guarantees deposited were adequate. DoT reasoned that if pushed for more guarantees, the companies would go into insolvency tomorrow. While Bharti Airtel has said it has guarantees worth Rs 10,800 crore that can be encashed if it defaults, Vodafone’s bank guarantees are to the tune of Rs 10,000 crore. Bharti holds Rs 1.12 lakh crore worth of licensed spectrum while Vodafone has around Rs 1.20 lakh crore worth.
During the course of the hearing, the bench headed by Justice Arun Mishra ruled out any recalculation of the amount observing that the demand raised by DoT would be considered final.
Although the issue of self-assessment by the companies was closed by the SC in March, Bharti Airtel’s counsel Abhishek Manu Singhvi on Monday again raised the issue stating that the DoT’s demand of Rs 43,000 crore included about Rs 23,000 crore of spectrum usage charge, which is not part of AGR. However, the court brushed aside this contention.
“Heard parties on liability and timeframe for making the payment. While hearing the matter, attempts were made to wriggle out of the liability like asking for reassessment and recalculations. A second innings is being played,” Justice Mishra observed. He said that if the companies continued doing the same the court will impose exemplary cost on them.
The court made it clear that it will only deal with the limited issue of timelines for payment.
The SC also expressed doubts over Vodafone Idea’s capacity to clear the dues, repeatedly asking how it would secure the payment if it goes into liquidation given its financial condition.
“The entire net worth of the company has been wiped out in the last 15 years since 2006…Whatever revenues we earned, we spent on AGR, taxes, services, etc. Over Rs 1 lakh crore of equity brought in by promoters has been used in 15 years of Indian operations. Of the total revenue of over Rs 6 lakh crore earned in the past 10 years, Rs 495 crore has been spent on expenses,” Vodafone Idea’s counsel Mukul Rohatgi said.
Asked by Justice Mishra, “whether it had made arrangement for contingent liabilities and what is its arrangement towards meeting its AGR obligations, Rohatgi said: “I have no income. Whatever I put from my own pockets, I have even lost that. Whatever I have earned in the last 15 years have been washed away. I have not hidden anything from the SC… All tangible assets secured before banks. No nationalised bank willing to give any guarantee now”.
“If no one is going to lend you anything, how do we catch hold of you. Our jobs have become difficult. If you were running losses all these years, it was not a prudent business then. Tell us how you are going to secure the liability,” the judges asked.
Rohatgi replied,” I say with folded hands. Give us at least 15 years. SC order should be honoured. If verdict cannot be honoured in one stroke, it should be in parts..”.
Vodafone Idea’s dues are around Rs 58,000 crore of which it has so far paid only around Rs 8,000 crore. Bharti Airtel’s dues are around Rs 43,000 crore and it has paid Rs 18,000 crore.