New Delhi: Telecom operator Bharti Airtel on Thursday said the Supreme Court verdict on adjusted gross revenue will weaken the viability of telecom sector, and the government must review its impact and find ways to mitigate financial burden on the already stressed industry.
The Supreme Court judgement, allowing the centre's plea to recover AGR (revenue earned from the sale of telecom services) of about Rs 92,000 crore from telecom service providers, will add to the woes of the financially distressed telecom operator.
Expressing disappointment on the verdict, Bharti Airtel said: "The TSPs have invested billions of dollars in developing the telecom sector and providing world-class services to consumers. This decision has come at a time when the sector is facing severe financial stress and may further weaken the viability of the sector as a whole".
The company said of the 15 old operators impacted by the order, only two private sector operators remain in service today.
"The government must review the impact of this decision and find suitable ways to mitigate the financial burden on the already stressed industry," Airtel said.
SC order on telecom revenue definition deals disastrous blow to industry: COAI
Industry body COAI on Thursday said the Supreme Court ruling on the telecom sector revenue definition will deal a "disastrous blow" to the industry, given its precarious financial condition.
"The question that arises is whether this is the financial straw that finally breaks the back of operators," Cellular Operators' Association of India (COAI) Director General Rajan Mathews told PTI.
Mathews further said this is a "disastrous blow" for the industry given its current state of acute stress.
Hemant Joshi, Technology Media & Telecom (TMT) Leader Deloitte India said this will create a huge pressure on the already loss-making sector.
"While it should remove ambiguity and reduce litigation, the impact on telcos will be very negative given their current state. It will put additional burden on cash flows and profits of telecom companies in India," Joshi said.
The decision will have a big impact on the sector as it is already in the state of huge financial distress, Prashant Singhal, Emerging Markets TMT Leader, EY, said.
There has been an industrial dispute since 1999-2000 between licensees and the licensor i.e., the Department of Telecommunications on the scope of the definition of AGR.
SC ruling to have damaging implications for industry: Voda Idea
Telecom major Vodafone Idea Ltd (VIL) on Thursday warned that the latest verdict on definition of telecom revenue will have "damaging implications" for the industry, and indicated it could explore filing a review application after legal consultation.
Expressing disappointment over the SC ruling, Vodafone Idea also exhorted the government to engage on the matter to find ways to mitigate financial stress of the industry.
"We will study the ruling as soon as it is available, along with our legal advisers, to determine next steps. If there are technical or procedural grounds for doing so, this could include a Review Application," VIL said in a statement.
It said the judgment has "significantly damaging implications for India's telecom industry" that is already reeling under huge financial stress and is left with only four operators.
"Today's order has huge impact on two private operators while most of the other impacted operators have exited the sector. We urgently request that the government engage on this matter in order to find ways to mitigate the financial stress for the industry,” it said.
VIL noted that the matter is 14 years old and pertains to the issue of whether revenue from other non-telecom related activities should be included in the adjusted gross revenue (AGR) definition under the telecom licence conditions.
"The matter has already been through several rounds of litigation, which have been largely in favour of the operators until now," VIL added.
In a setback to telecom service providers, the Supreme Court on Thursday allowed the Centre's plea to recover AGR of about Rs 92,000 crore from them.
In July, the Centre had told the apex court that leading private telecom firms like Bharti Airtel, Vodafone and state-owned MTNL and BSNL have pending licence fee outstanding of over Rs 92,000 crore till date.
The liability on Bharti Airtel alone is estimated to be over Rs 21,000 crore.
Read more: SC allows Centre's plea to recover Rs 92,000 crore from telecom companies
