Telecom majors like Bharti Airtel and Vodafone Idea, in their review plea today, sought an urgent relief on the apex court's ruling on adjusted gross revenue (AGR). The matter was brought before the SC bench led by Justice Arun Mishra for urgent hearing. The Supreme Court said it would take a call after talking to the Chief Justice of India (CJI) Sharad Arvind Bobde, as to whether the review petitions filed would be heard in an open court or not.
The final deadline for the telcos to pay AGR dues worth over Rs 93,000 crore is January 23, though both have expressed their inability to pay the pending dues. Vodafone Idea Chairman Kumar Mangalam Birla recently said the telco would shut shop without the government's help. Bharti Airtel Chairman Sunil Mittal has also asked the government to be sympathetic to telcos.
The reason mentioned by both is heavy losses incurred by the telcos since the entry of Reliance Jio in the telecom space. Vodafone Idea is struggling with losses for three years that swelled to Rs 50,922 crore -- the highest quarterly loss in the corporate history -- in the second quarter of FY20 as it had to make significant provisions for the AGR dues. Airtel reported record losses of Rs 22,830 crore in the same quarter.
The AGR dispute dates back to 2003 when the association of telecom operators filed the first plea with the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) challenging the definition of AGR.
Vodafone Idea too has treated the dispute as a contingent liability and has provisioned, among other things, Rs 17,123.6 crore for the licencing disputes.
As per standard accounting practice, companies have to make provisions for such claims. As per estimates, Airtel owes about Rs 21,682 crore while Vodafone Idea's payout will be much bigger at Rs 28,308 crore. Their provisioning is far short of the actual amount due.