Final verdict of 14-year-old legal battle with govt may strain telcos further


The final verdict of a 14-year-old legal battle between the country’s mobile operators and the department of telecommunications over the definition of ‘adjusted gross revenue’ is near and may deal blow to debt-laden operators such as Bharti Airtel and Vodafone Idea which are already battling shrinking revenue streams.

Final verdict

AGR is the basis on which department of telecommunications (DoT) calculates levies payable by operators and then it has been a bone of contention in the sector. Telecom operators are liable to pay around 3-5% and 8% of the AGR as spectrum usage charges and licence fees, respectively, to DoT.

The matter has been under litigation for 14 years with operators arguing that AGR should comprise revenue from telecom services, but DoT insisting that AGR should include all revenue earned by an operator, including that from non-core telecom operations.

The battle started when telcos migrated to new system offered by the government in 1999 under which operators agreed to share certain percentage of revenue with the government.

COAI has alleged that DoT unilaterally changed the earlier understanding of the definition of revenue share to include the revenue received by the licensees from their non-licensed activity.

The industry body also contends that under the telecom licence issued to the licensees, there is no prohibition on the licensees from doing other business or from making investments on non-telecom business and the income, interest or dividend received from such investments cannot be added to the gross revenue of the licensed activities so as to claim a revenue share from those revenues of the licensee by DoT.


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