The impact of the Supreme Court’s AGR verdict: Mobile calls and data will be costly. The Supreme Court has given the telecom companies 10 years to repay the dues on the AGR issue. The government was ready to give even 20 years, but given the stand of the Supreme Court, companies had asked for 15 years.
The impact of the Supreme Court’s AGR verdict: Mobile calls and data will be costly
However, the Supreme Court heard neither the government nor the companies and ordered the payment of the arrears in 10 years. Even though AGR is a complex issue, we customers will have to suffer it later. Let’s know how-
First of all, what is this AGR?
AGR means adjusted gross revenue. It is a fee-sharing model between the government and telecom companies. In 1999, it was made a revenue sharing fee model from the fixed license fee model. Telecom companies have to share a part of their total revenue with the government.
What was the controversy that went to the Supreme Court?
The definition of AGR was disputed. The issue reached the Supreme Court. The government wanted the AGR to cover all the revenues of the telecom companies, while the telecom operators only wanted to share the revenue from core services.
On 24 October 2019, the Supreme Court decided that the definition of AGR will be what the government is saying. That means the entire revenue was included in it.
Which company owes so much?
According to the Supreme Court’s decision, Rs 1.69 lakh crore was recovered on the telecom companies. In this also, the Department of Telecommunications has got 26 thousand crores. In March 2020, Airtel owes about 26 thousand crores.
55,000 crore owed to Vodafone-Idea and about 13,000 crore rupees owed to Tata Teleservices. 195 crore was recovered on Jio, nothing is outstanding now.
Where will telecom companies bring money?
Credit rating agency ICRA says that telecom companies will have to pay nine thousand crore rupees by March 31, 2021, following the order of the Supreme Court. After that by February 2031, every year 12 thousand crore rupees will have to be paid.
These companies had a debt of Rs 5 lakh crore as on 31 March 2019, which has come down to Rs 4.4 lakh crore by March 2020. But this debt will not be reduced anymore, as companies will have to raise additional funds to pay AGR.
Airtel has already made an AGR payment plan. But, Vodafone-Idea is the most problematic. And has the highest debt and AGR has to be paid more. It has called a board meeting to raise funds.
How will this affect our pocket?
Understand that our own pocket has to be affected lately. Currently, the average revenue per user in India, ie ARPU, is the lowest in the world at Rs 80-90. If Vodafone-Idea is to strengthen its financial position, it will have to carry ARPU up to 120 rupees. It is not easy. In December last year, all telecom companies including Jio raised rates. Soon, telecom companies can do it again.
Analysts are also saying that if the situation of Vodafone-Idea worsens, it will not be good for the Indian market. After its closure, only two private companies – Jio and Airtel, will remain