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SC ruling will aggravate stress in telecom sector: COAI

Ahead of the January 23 deadline to pay their adjusted gross revenue (AGR) dues, Bharti Airtel, Vodafone Idea and Tata Teleservices on Thursday received a second blow from the Supreme Court within three months after the court rejected their plea to review its AGR ruling under which telcos have been asked to pay nearly Rs 1.02 lakh crore as statutory payment to the government.
SC ruling will aggravate stress in telecom sector: COAI

There was widespread disappointment in the sector after the dismissal of the review petitions.

While Vodafone Idea and Tata Teleservices did not comment, Airtel said it is mulling a curative petition on the AGR order.

Telecom industry association COAI said the review dismissal by the Supreme Court was like the last straw on the back of the financially stressed sector.

"While we respect the Hon'ble Supreme Court's order dismissing the industry's review petition of the AGR matter, the telecom sector is again deeply disappointed. The sector, which is currently reeling under a debt of Rs 4 lakh crore, is a key contributor to the Indian economy in terms of consumer benefit, employment, revenue generation and contributes 6.5 per cent to the GDP," a COAI statement said.

"The sector is already facing heavy taxes and levies in the range of 29 per cent to 32 per cent, which are globally the highest. The Supreme Court's dismissal of the review petition is the last straw in contributing to financial distress and it remains to be seen whether the industry will be able to recover from this setback. This added financial pressure on the sector will also adversely impact Prime Minister Narendra Modia's vision of Digital India", COAI Director General Rajan Mathews said.

Airtel said that "the industry needs to continue to invest in expanding networks, acquiring spectrum and introducing new technologies like 5G." It also said "that the money now required to be paid punitive interest, penalty and interest on penalty which forms nearly 75 percent of AGR dues, "would have better served the digital mission of the country".

The setback is severe, particularly for Vodafone Idea and Bharti Airtel, who have been seeking waiver of penalties and interest, but with the rejection of their pleas, the companies' next course of action on operations and expansions is unclear.

For Vodafone Idea it has even become a question of survival. Chairman K.M Birla has said the company may have to stop its operations if it does not receive any relief from the government.

Vodafone Idea and Airtel have to pay the government Rs 53,039 crore and Rs 35,586 crore, respectively by January 23.

Tata Teleservices, which has sold its consumer mobility business to Airtel but the deal is yet to be closed pending the Department of Telecom's approval, faces dues of Rs 13,823 crore.

Including these three companies, some 15 telcos need to pay over Rs 1.47 lakh crore to the government as disclosed recently to Parliament by the Telecom Minister Ravi Shankar Prasad .

Airtel has just raised $3 billion to fund the dues. Airtel has a debt of Rs 1.10 lakh crore and Vodafone Idea has a liability of Rs 1.20 lakh crore.

( With inputs from IANS )

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