A deserved reprieve (Indian Express)
Mains Paper 2: Governance
Prelims level: Adjusted gross revenue
Mains level: Important aspects of governance, transparency and accountability
- In its verdict on the adjusted gross revenue (AGR) case, the Supreme Court on Tuesday allowed telecom operators to pay their AGR dues over a span of 10 years.
- The decision marks, hopefully, an end to the uncertainty over this longstanding dispute between the telcos and government.
Easing the pressure:
- Telecom operators will now have to pay 10 per cent of their AGR dues upfront by March 31, with the balance being payable in annual instalments from March 2022.
- So far, Bharti Airtel has reportedly paid Rs 18,000 crore of its AGR dues of Rs 43,980 crore, while rival Vodafone Idea has handed over Rs 7,800 crore of total dues adding up to Rs 58,254 crore.
- Allowing telcos to stagger payouts over a 10-year period, limiting their immediate cash flow, will greatly ease the pressure on them.
- However, as the telcos, and even the government, had sought a longer repayment cycle to pay the dues, ranging between 15-20 years, the relief provided is only partial.
- The possibility of a review petition being filed thus cannot be ruled out.
- Precarious future of telecom sector:
- While the verdict does ease the immediate stress on the operators, there continue to be doubts over Vodafone Idea’s future, given its precariousfinancial position.
- This in turn raises concerns over the telecom sector in India morphinginto a duopoly with one very strong player.
- While Vodafone Idea’s continued existence may well depend on its promoters’ willingness to pump in additional capital, for the industry to stabilise after the brutal price war of the last few years which bled the incumbents dry, tariffs, and as a consequence, the average revenue per user (ARPU), have to rise.
- On the equally critical issue of the sale of spectrum, while the Court had earlier questioned whether the spectrum held by telcos undergoing the insolvency and bankruptcy process can be auctioned off, without payment of government dues, it has now left this matter to be decided by the National Company Law Tribunal (NCLT).
- This issue has arisen in the case of RCom where the government is unlikely to recover its dues from the resolution process as it ranks lower than financial creditors in the insolvency framework.
- However, with the Department of Telecommunications (DoT) having the power to approve the transfer of licences and spectrum — it has reportedly opposed the monetisation of spectrum in the RCom case — there continues to be uncertainty over how this issue will be resolved.
- It is quite possible that this matter ends up in the courts.
- Court provides relief to telcos, leaves issue of spectrum sale to tribunal — but resolution may still be far away.
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General Studies Pre. Cum Mains Study Material
Q.1) With reference to the International Day Of The Victims Of Enforced Disappearances, consider the following statements:
1. International Day Of The Victims Of Enforced Disappearances is being observed on 30 August.
2. It was adopted by the UN General Assembly on 20 December 2006, state that, a "forced disappearance" qualifies as a crime against humanity.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q.1) What is AGR? What is the impact of the latest ruling?