The adjusted gross revenue (AGR) dues payment saga has taken a potentially unwelcome turn for Indian operators Reliance Jio and Bharti Airtel, which may now be liable for more payments than they at first assumed.
This stems, in part, from efforts by both the Indian Department of Telecommunications (DoT) and the country’s Supreme Court to try to find ways to collect AGR dues from closed or bankrupt companies.
According to TeleGeography's CommsUpdate and the Indian press, the AGR calculations agreed last October are proving hard to apply in some cases as many of the companies affected by last year’s decision have closed, while two – Reliance Communications (RCOM) and Aircel – have been declared bankrupt and are undergoing insolvency proceedings.
Thus they, in theory, cannot pay their AGR dues at the moment. But perhaps their spectrum rights can be used – or rather operators that used their frequencies via sharing agreements can be made to pay the dues instead.
With this in mind, last week the Supreme Court suggested that if bankrupt companies Videocon Telecommunication and Aircel couldn’t pay past dues, Bharti Airtel, which has apparently acquired spectrum from both companies, might have to pay. The court has also suggested that Reliance Jio, which was using Reliance Communication’s spectrum, could pay the AGR-related dues of the insolvent company.
The possibility that Jio and Airtel might take on some of these AGR dues is being resisted by both companies, which insist that they cannot be forced to take on the AGR liabilities of bankrupt companies with which they had shared or traded spectrum.
The DoT has informed the Supreme Court that the AGR payments made by telecommunications companies cannot be said to be full and final until the government hears the court order to calculate final AGR liability on traded or shared spectrum. That presumably means that definitive guidance on what happens next is to come from the Court rather than the DoT.
Also outstanding is the little matter of the Court’s final judgement on the timeframe needed to pay AGR dues, which could ease or exacerbate Vodafone Idea’s problems. It’s not yet clear, however, when the Court plans to make binding decisions on all of these matters.