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Vodafone Idea needs 15 years to pay AGR dues; wants Rs 8,000-crore GST refund

Vodafone Idea's own estimate pegs its dues at Rs 23,000 crore, the DoT has demanded more than double the amount; so far, Vodafone Idea has paid only Rs 3,500 crore worth of pending dues

Manoj Sharma | February 28, 2020 | Updated 09:24 IST
Vodafone Idea needs 15 years to pay AGR dues; wants Rs 8,000-crore GST refund
Vodafone Idea, which pays 8 per cent AGR as licence fee, wants the DoT to reduce it to 3 per cent

Vodafone Idea has said it'll take 15 years for the company to pay pending statutory AGR (Adjusted Gross Revenue) dues worth Rs 53,000 crore. In a letter to the Department of Telecommunications (DoT), Finance Ministry and NITI Aayog, the telco has also sought Rs 8,000 crore worth GST (Goods and Services Tax) refund in licence fees and spectrum usage charges amid pressure from the government as well as the Supreme Court.

Notably, the DoT's highest decision-making body, Digital Communications Commission (DCC), will likely meet tomorrow to decide if the telcos, including Bharti Airtel and Vodafone Idea, should at all be given any relief.

Vodafone Idea's own estimate pegs its dues at Rs 23,000 crore, the DoT has demanded more than double the amount from the company. So far, Vodafone Idea has paid only Rs 3,500 crore worth of pending dues. Vodafone Idea, which pays 8 per cent AGR as licence fee, wants DoT to reduce it to 3 per cent. It says the government should also reduce spectrum usage charges from 3-5 per cent to 1 per cent.

Also Read:Airtel, Vodafone Idea subscriber? Should you port out

Industry lobby body COAI (Cellular Operators Association of India) have also written a letter to DoT asking to set-off GST credits lying with the government, reduce the license fee and SUC, implement the floor pricing immediately, and restore the confidence of banking sector in the telecom companies.

"Internationally, it is a common practice to not charge GST on sovereign payments. There's nearly Rs 40,000 crore of input GST stuck for telecom sector....Banks are currently unwilling to take any risk with respect to telecom sector and are constantly asking telecom operators to reduce their exposures by refusing to issue new bank guarantees or even to renew the bank guarantees. There's a need to give a clear message to banks that government is there to support the sector," COAI letter said.

Also Read:AGR-hit telcos set for another jolt; must pay additional service tax, GST on unpaid dues

Though Vodafone Idea pegs its pending dues at Rs 23,000 crore, industry experts believe it would be extremely challenging for Vodafone Idea to pay up the amount sought by DoT. Vodafone Idea Chairman Kumar Mangalam Birla said in December last year that the company would not put "good money after bad", and that it could rather "shut shop" if the government did not give relief to the company. Vodafone Global CEO Nick Read too had said that Vodafone Idea would head for "liquidation" if the government did not offer relief to the telcos.

The telco, which employees over 13,000 direct employees, has also said the continuous pressure to pay the amount could render 10,000 people jobless and create chaos among its 300 million subscribers in India. Telecom companies owe Rs 1.47 lakh crore to the DoT, including Rs 92,600 crore as licence fee and Rs 55,100 crore as spectrum usage charges. Bharti Airtel owes Rs 35,600 crore, while Vodafone Idea has to pay Rs 53,000 crore. Bharti Airtel and Tata Group have also made AGR payments worth Rs 10,000 crore and Rs 2,197 crore to the DOT, respectively. Reliance Communication has pending dues worth Rs 21,200 crore and Tata Group has to pay Rs 13,800 crore, as per DoT's estimates. Of the total pending amount, Vodafone Idea and Airtel collectively have to pay Rs 88,600 crore.

Also Read: Vodafone Idea to drop brand 'Idea' from postpaid services

Edited by Manoj Sharma 

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