India's telecom department amends the AGR definition

India's telecom department amends the AGR definition

India's Department of Telecommunications (DoT) has notified the amendment to the Unified Licence (UL) Agreement for calculation of Adjusted Gross Revenue (AGR) for computation of licence fee.

According to a circular from DoT, the new amendment takes Applicable Gross Revenue as equal to Gross Revenue minus revenue from operations other than telecom activities. Income from receipts from the USO fund, bad debts, excess provisions, interest, dividend, capital gains, income from property rent, and an insurance claim will be excluded from Gross Revenue.

The move, applicable from October 1, would reduce future payment obligations of carriers to the government in the form of levies such as licence fees, thus helping improve the finances of the debt-laden sector.

The old definition of adjusted gross revenue (AGR) upheld by the Supreme Court had led to a burden of around INR 1.47 lakh crore (USD 20 billion) on operating telecom service providers, including Bharti Airtel and Vodafone Idea, and pushed the sector into a deep financial crisis.

The definition of AGR, which had been a major bone of contention for the sector has been rationalised by excluding non-telecom revenue of telecom companies on a prospective basis in a Cabinet meeting in September.

The new amendments would definitely make the private operators in the country very happy. This is what Bharti Airtel and Vodafone Idea were fighting with the government about in the Supreme Court last year (2020). The private telcos wanted the AGR to exclude all the non-telecom revenues.

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