SC seeks ‘reasonable’ payments from telcos, 10-year financial information

NEW DELHI: The Supreme Court on Thursday sought payment of “reasonable” amounts from all telcos, as well as their audited balance sheets and IT returns for the last 10 years including for the year ended March 31, 2020, along with details of AGR dues paid during the same period, before it considers a government plan to give them a 20-year window for payments.
Telcos owe as much as Rs 1.7 lakh crore by way of AGR dues comprising of license fees, spectrum usage charge, interest and penalties to the government, as per the court’s ruling. They have already lost a plea to review that ruling. The government plan if accepted by the court is their last window of hope for some extra time to pay up their dues.

An order uploaded on the court’s official website said: “We have requested the telecom operators to file audited balance sheets, for the last 10 years including the calendar year ending March 31, 2020, as well as IT returns and particulars of AGR deposited during the last 10 years and we have also requested to make payments of reasonable amount to show their bona fides before the next date of hearing.”



At the beginning of the hearing, the government, through Solicitor General Tushar Mehta, had informed the court that similar charges worth Rs 4 lakh crore against PSUs, mostly non-telecom companies holding spectrum, had been withdrawn to the extent of 96%.

The court had just days ago clarified that its AGR ruling was not applicable to PSUs and such charges could not have been invoked against them.

A three-judge bench led by Justice Arun Mishra was examining a government plan to allow the telcos a 20-year window to pay up their dues. The telcos are backing the government’s staggered plan but are opposing a one-time upfront demand saying it would send some to insolvency. The companies, however, have expressed their inability to provide any additional guarantees.

The bench, which has earlier spoken up about a reasonable time provided they back up their payment plans with collaterals and guarantees, eventually adjourned the hearing till July to allow the government and the telcos more time to discuss the issue to come up with reasonable plans that could pass the court muster.

These could even be personal guarantees by the company’s directors. The bench, also comprising Justices MR Shah and S Abdul Nazeer, observed that the telecom was a sector which had done well in the lockdown and there was no reason why they must not pay up their dues.

“Telecom is the only sector making money during the pandemic. They must deposit some amount. The government needs the money during the pandemic,” Justice Shah said.

Shares of Bharti Airtel and Vodafone Idea started weak on the BSE Thursday, before rising to their intraday highs of Rs 572.85 and Rs 10.31, respectively, shortly after the order, before paring their gains to end in the negative. Bharti Airtel closed 0.5% down at Rs 560.80 while Vodafone Idea ended 0.9% lower at Rs 9.76.

Ailing Vodafone Idea Ltd, through senior advocate Mukul Rohatgi, said that the company’s position was precarious and it was not in a position to provide any further guarantees. Vodafone Idea said it had already paid the government Rs 7,000 crore. It had also provided another Rs 150 billion as guarantees for spectrum and licences. These could be used as guarantees, Rohatgi said.

He said that the company was not making any profits for the last four quarters, expressing its inability to adduce any fresh guarantees. “No bank will give me a guarantee today,” he said.

Rohatgi pointed out that the company’s dues stood at Rs 50,000 crore to argue that no director can be asked to be a personal guarantor. The bench then directed the telcos to file their financial statements in court before adjourning further hearing on the government plan till July.

Bharti Airtel, too, opposed additional guarantees. Senior advocate Abhishek Manu Singhvi representing Airtel said the latter had paid 62% of its dues and would sit down with the government to calculate the rest of it.

The company said that it was no fly-by night operator and had no intention of “not paying the balance amount” as it would only invite “coercive action” and “shut down its business”.

The government already has certain securities and guarantees amounting to Rs 10,800 crore of the company and these could be used as guarantee against non-payment or default, it said.

Sanjay Kapoor, ex-CEO of Bharti Airtel, said it appeared that the top court might be willing to look at the less onerous options than personal guarantees. “DoT will have to support the argument on reasonability of upfront payment towards AGR dues. If the sector is given a chance to earn and pay, which is what they are asking for, DoT must leave some cash with them to do business,” he said.

Kapoor added that the timeline for staggered payout could be co-terminus with the licensing period of the individual telcos, rather than a flat 20 years.