Vodafone Idea to SC: Whatever we earned in last 14 years wiped out

Supreme Court hearing on AGR dues payment by Vodafone Idea, Bharti Airtel and other telcos.
Vodafone, Idea

The Supreme Court (SC) will on July 20 continue hearing the plea by the telecom companies to allow staggered repayment of their adjusted gross revenue (AGR) dues.

A three-judge bench of Justices Arun Mishra, S Abdul Nazeer and MR Shah will hear the case.

SC observations:

Did Vodafone Idea ensure provisioning for AGR liabilities? Demands had been raised by the Department Of Telecommunications (DOT), why not provided for by Vodafone Idea?

“With so many losses, how are we to rely on you? You are making the decision more difficult for us. How should we secure AGR dues payable by Vodafone Idea?”

Vodafone Idea has conceded that no bank is prepared to lend it money.

You are showing such a black picture, how are we supposed to see any light? Vodafone Idea needs to secure AGR dues payable.

Who is the kingpin? Who is managing Vodafone idea?

We want to make clear again that there is no space for self assessment. Otherwise we will have to draw serious contempt against everyone. We made it clear that there is no room for self assessment. This would a violation of our orders.

Vodafone Idea Counsel Mukul Rohatgi to the SC: 

>> Have submitted financial documents like income tax returns. Over  the last 15 years, entire networth of the company has been wiped out. Over 1 lakh crore of equity brought in by promoters has been eroded.

>> All the revenue has been spent on liabilities, tax, dues. Total revenue of over 10 years was Rs 6.27 lakh crore, of which Rs 4.95 lakh crore was Spent on expenses.

>> Will honour the judgment and the AGR dues sought from the company.

>> Not seeking re-calculation, not revisiting the demand. SC has made it clear, we will rely on the demands issued by DoT.

>> Have no assets left with us, only asset that remains is Spectrum. Goods and services tax (GST) refunds of Rs 8,000 crore accruing to us can be retained by the government

Solicitor General Tushar Mehta to SC:

>> No confusion about the SC Order, no room for re-assessment to be allowed. Have not submitted anything to suggest re-calculation. There is no confusion in the DoT.

Also Read: Telecom stock fly ahead of AGR hearing today

The companies had appealed to the court to allow payment over a longer period of 10 or 20 years. At the last SC hearing on the AGR case, Vodafone Idea counsel and senior advocate Mukul Rohatgi had told the court that the company is “barely afloat” and that the telco would have to shut operations if dues are to be paid upfront. “This will impact 11,000 employees,” he had noted.

Here’s a summary of the previous hearings: 

>> In its last hearing on June 18, the SC had asked the telecom companies to make a minimum payment to show bonafide, provide a roadmap of payments (payment plan) if allowed to stagger payments and provide books of accounts for the last decade for assessment.

>> As of the last hearing, the SC bench remained unconvinced that the telecom companies had justified the timeline requirement and said there was “no guarantee” of what could happen over 20 years.

>> Vodafone IdeaBharti Airtel, and Tata Teleservices owe the highest AGR dues.

>> Total AGR dues and repayments so far: As per DoT estimates, telecom companies owe a total of Rs 1.19 lakh crore with payments received so far at Rs 26,896 crore. The balance, therefore, is currently at Rs 92,520 crore.>> AGR dues for Vodafone Idea:
 – outstanding dues as per DoT at Rs 58,254 crore.
– Vodafone Idea has paid Rs 7,854 crores so far including Rs 1,000 crore paid on July 17 and Rs 6,854 crore paid in three tranches earlier
– balance due is Rs 50,400 crore

–  Vodafone’s self-assessment pegs dues at Rs 21,533 crore>> AGR dues for Bharti Airtel:
 – outstanding dues as per DoT at Rs 43,980 crore
– Bharti Airtel has paid Rs 18,004 crore so far
– balance due is at Rs 25,976 crore

– Airtel’s self-assessment pegs dues at Rs 13,004 crore>> AGR dues for Tata Teleservices:
 – outstanding dues as per DoT at Rs 16,798 crore
– Tata Tele has paid Rs 4,197 crore so far
– balance due is at Rs 12,601 crore

–  Tata Tele’s self-assessment pegs dues at Rs 2,197 crore

>> The SC had, however, ordered that demand of past telecom dues from oil PSUs be withdrawn. Accordingly, the DoT withdrew a demand of over Rs 2.3 lakh crore it had made on state-owned gas utility GAIL India and Oil India (OIL) in past telecom dues.

>> Why the issue of staggered payments

>> In October last year, the SC upheld the government’s position on the calculation of statutory liabilities. The government suggested the revenue from the non-core businesses should also be included in arriving at the annual AGR amount. A part of the AGR is paid by telecom companies as licence and spectrum fee to the exchequer.

>> Burdened with the highest claim from DoT, the companies had appealed to the court to provide the option of staggered payments over either 20 years or 10 years. Vodafone Idea counsel had particularly argued that the only way to repay such huge AGR dues is to ‘earn and pay’.

>> SC had asked telecom companies to provide bank guarantees and a timeline of payments so that it would have ample security to grant such a long tenure for repayments.>> The apex court’s argument was that the telecom companies cannot be permitted to make staggered payments of AGR dues over 20 years without providing any security.

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