AGR dues: ISPs may move Supreme Court to seek relief on lines of PSUs

By: |
December 01, 2020 7:30 AM

SC had directed DoT to withdraw demand from non-telecom PSUs; ISPs feel their case is similar

telecom companies, telcos, ARPU, average revenue per user, telcos profitGiven the high interest levels in the past, this increased the AGR dues by almost four times.

While the matter relating to adjusted gross revenue dues of telecom operators and non-telecom public sector undertakings have got resolved, the same cannot be said with regards to the stand-alone Internet service providers (ISPs). These players plan to approach the Supreme Court shortly to seek relief on the lines granted to the non-telecom PSUs by the apex court as they feel that their case is also similar and clubbing them with the telecom operators is not fair.

The department of telecommunications has raised a total demand of around Rs 18,000- 19,000 crore as dues on a clutch of stand-alone ISPs.

Clarifying its October 2019 order relating to the definition of AGR and dues emanating as a result of it, the SC had in June this year told the DoT that demand notices of around Rs 4 lakh crore raised on the PSUs having telecom licences and spectrum was a gross misuse of its earlier ruling on the matter. It had said that the original order pertained to the telecom operators and did not apply to the PSUs and therefore was “totally impermissible”. It had directed the DoT to withdraw the demand.

Quite in contrast, the apex court had in September directed the telecom operators to pay 10% of their total dues by the end of FY21 and the balance over the next 10 years in equal installments.

Since the AGR matter was a dispute between the telecom operators and the DoT and like the non-telecom PSUs even the ISPs were not party to the case, the latter feels that no demand should be raised on them also.

”The DoT can charge AGR on services licensed by it. The whole AGR fight was between telecom operators and DoT, and ISPs became a casualty after the verdict was pronounced. We were not even a party to the case where we could have expressed our viewpoint,” an executive with an ISP, who didn’t want to be quoted, told FE.

A query sent to the Internet Service Providers Association of India (ISPAI) regarding the matter remain unanswered till the time of going to the press.

The AGR issue was more than 20 year old case where the DoT and the telecom operators had been at loggerheads as to what kind of revenues should be included while calculating it. The telcos felt that only revenues accruing from licensed telecom services should be included while those which are non-telecom like rentals from real estate, treasury income, etc, should not be part of it. The government differed and said that the entire revenue of a licensed telco should be part of AGR.

The Supreme Court in October 2019 ruled in favour of the government, stating that the entire revenue of a licensed telecom operator should form part of AGR. Using this judgment, the DoT issued notices to some PSUs as well as standalone ISPs also. In the case of the PSUs, the core operation was not telecom but they had some form of telecom licence and spectrum for a part of their operations. Since the concerned PSUs like Railways, PowerGrid, Oil India, Gail, etc, had taken telecom licences under the name of the flagship company rather than their telecom operations subsidiary, the DoT applied SC’s logic that their entire revenue (including of the flagship firm) should be taken into account for calculating the AGR.

The case of ISPs was also somewhat similar. They do not have spectrum but have licences for providing Internet services and pay a licence fee based on AGR. The ISP licences were taken by companies who had other operations as well like cable services, software related activities, etc, and they too had taken licence in the name of the flagship organisation rather than in the name of a separate vertical created for providing Internet services.

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