Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

AGR dues issue in Telecom Sector

Note4Students

From UPSC perspective, the following things are important :

Prelims level : AGR issue

Mains level : AGR disputes of Telecom companies

The Supreme Court has held that telecom firms will get 10 years to clear their adjusted gross revenue or AGR dues and that the National Company Law Tribunal (NCLT) should decide whether or not spectrum can be sold under the Insolvency and Bankruptcy Code.

Try this PYQ:

Q. In India, which of the following review the independent regulators in sectors like telecommunications, insurance, electricity, etc.?

  1. Ad Hoc Committees set up by the Parliament
  2. Parliamentary Department Related Standing Committees
  3. Finance Commission
  4. Financial Sector Legislative Reforms Commission
  5. NITI Aayog

Select the correct answer using the code given below:

(a) 1 and 2

(b) 1, 3 and 4

(c) 3, 4 and 5

(d) 2 and 5

Supreme Court rule on AGR dues

  • In its judgment, the SC gave all telcos a 10-year timeline to complete the payments of AGR dues, instead of the old 20-year schedule suggested by the DoT.
  • It also directed telcos to pay 10 per cent of the total AGR dues by March 31, 2020, following which they can make payments in annual instalments between 2021 and 2031.
  • The non-payment of dues in any year would lead to the accrual of interest and invite contempt of court proceedings against such companies.
  • A crucial issue of whether the spectrum could be sold under IBC will now be decided by the National Company Law Tribunal.

What is AGR?

  • Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
  • It is divided into spectrum usage charges and licensing fees, pegged between 3-5 per cent and 8 per cent respectively.

What is the issue about?

  • All the telecom companies that operate in India pay a part of their revenues as licence fee and spectrum charges to the Department of Telecommunications (DoT) for using the spectrum owned by the government.
  • In its definition of AGR, the DoT had said that telcos must cover all the revenue earned by them, including from non-telecom sources such as deposit interests and sale of assets.
  • The telecom companies were opposed to this and had challenged this definition of AGR in several forums, including the Supreme Court.
  • On October 24, 2019, the SC had upheld the DoT’s definition of AGR.
  • Though the telcos sought a review of the judgment, it was dismissed by the top court which had then insisted that telcos clear all the dues by January 23, 2020.
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