Telcos can defer annual AGR dues by 4 years, DoT may tell SC

The Department of Telecommunications (DoT) will likely inform the Supreme Court on April 7 that telcos have been given an option to defer their annual adjusted gross revenue (AGR) payments by four years.

As per the annual compliance report the government needs to submit to the Supreme Court each year, DoT will also inform that because of the deferral in payment timelines, bank guarantees (BGs) would also be returned to the carriers, a senior government official told ET.

“Telcos will also have to file this to the Supreme Court on April 7, in accordance with the Supreme Court order that had asked for an annual update on AGR dues,” the official said.


The DoT will also inform the court of its decision to return all BGs to telcos, since the AGR payment against which the BGs were held has been secured.

“The government has the option to convert the dues into government equity after 4 years,” the officer explained.

The DoT is informing the court about the BGs along with the update on AGR dues as close to Rs 8,000 crore worth Vodafone Idea’s BGs are set for expiry around early April and the telco has repeatedly reiterated its inability to raise more guarantees from banks.

As reported by ET earlier, BGs worth about Rs 15,000 crore belonging to Vodafone Idea (Vi) have been withheld by the government and the figure for Bharti Airtel is Rs 7,000- Rs 8,000 crore. The BGs held back had been furnished against the spectrum payments of telcos.

Vi has urged the government to urgently release its BGs as the loss-making telco is desperately trying to raise funds to invest in its 4G network to better compete with stronger rivals Reliance Jio and Airtel and stem subscriber losses.

People familiar with the matter said the DoT had drafted a cabinet note for issues concerning the return of BGs, but it was withdrawn as many in the government felt that it was well within the ambit of the telecom relief package to allow the return of all BGs, including those withheld against the AGR dues.

“ Also, the legal opinion said that this is a policy decision and the government may do as it deems fit, so it was decided that DoT would go ahead and file this information with the Apex Court,” the officer said.

The government announced a telecom relief package in September last year, giving a breather to the telecom industry and especially Vi, under which telcos were given a four year moratorium to defer their AGR payments, a drastic reduction to 20% in bank guarantees to be submitted to the government and scrapping of the spectrum usage charge, among others.

In a reply to a Lok Sabha question, the minister of state for communications Devisinh Chauhan last week had said, the government would be returning the BGs to telcos who had opted for the moratorium and ask telcos to furnish the same 13 months before the end of the four-year period.