Telecom department chalks out plan to reduce rows with telcos

The telecom department is drawing up proposals aimed at reducing disputes with operators that have led to as much as Rs 80,000 crore getting stuck in litigation, delaying mergers and acquisitions and deterring overseas investors, said people with knowledge of the matter. The suggestions include unifying levies, settling some cases and being lenient on minor infringements.

The Department of Telecommunications (DoT) will send its suggestions to the law ministry for vetting before the communications ministry takes a final call, government officials told ET. “We do not want the government to lose out on dues that the operators owe us,” said an official.

“The telcos have a different point of view and this has led to a large amount of Rs 75,000 crore- Rs 80,000 crore, including penalties and interest, that’s stuck in legal battles.”


The Department of Telecommunications (DoT) is considering proposals such as combining all telecom levies into one charge, on the lines of the goods and services tax (GST), which has subsumed indirect taxes. It may also suggest identifying cases that can either be settled or withdrawn due to the issues no longer being relevant because of new technology or new policies besides reviewing the imposition of maximum penalties even for minor lapses, officials and industry executives said.

Most of the disputes relate to multiple levies under different heads such as licence fees, spectrum usage charges (SUC) and one-time spectrum fee (OTSC). The first two, a major proportion of the amount, are based on the annual adjusted gross revenue (AGR), the definition of which is yet to be decided by the courts. Owing to this, all related levies also get challenged and stayed by various courts or the telecom tribunal.

One of the officials said a clearer definition of AGR is also being looked at. Telecom minister Manoj Sinha recently told ET that AGR needs to be “rationally” defined, to clear up a lot of pending matters. “We feel each case should be decided at most in two hearings,” said one of the officials cited above. “It shouldn't take several rounds of hearings to decide upon matters. It is such a waste of resources and time.”

The operators are hoping for a resolution since these disputes delay M&A deals, hurt balance sheets and hinder them during the pursuit of overseas funds, executives said.

For instance, when telcos want to trade spectrum or embark on an M&A, DoT raises demands for dues that need to be met before the government approves the move, they said. Telcos have to move court to get a stay on such demands and get clearance, prolonging the process. Vodafone India and Idea Cellular paid a combined Rs 7,249 crore in dues before they could get approval for their recent merger, creating the country’s biggest mobile operator.

“When we raise money in global bond markets, investors think twice before agreeing because why would you invest in a company knowing thousands of crores are stuck in legal battles with the government?” said a senior executive at one of the major telcos. “Who would want to invest when the case can go either way?” The operators say there have been informal talks on ways to ease the situation.

“These large amounts are not surprising since every due amount has a penalty attached to it,” said Rajan S Mathews, director general of the Cellular Operators Association of India (COAI) lobby group. “The litigation costs are high on either side, which further adds a strain on the balance sheets.”

He said that the government could also look at implementing an “adjudicatory/alternate dispute settlement process where government officials are empowered to settle cases/disputes in good faith, before going to litigation, without fear of being second-guessed later by audit agencies.”

According to sources, about Rs 25,000 crore of the dues stuck in litigation pertains to SUC alone. DoT has written to telcos, asking them to pay these dues up to June. Bharti Airtel owes Rs 8,243.85 crore, Reliance Jio Infocomm owes Rs 116.51 crore, Reliance Communications and its subsidiary Reliance Telecom owe Rs 2,594.45 crore and Rs 519.32 crore, respectively.