AGR dues: Voda Idea seeks relief; asks DoT for Rs 8,000 crore GST refund
Feb. 27, 2020

Financially stressed telecom operator Vodafone Idea, in a letter to the Department of Telecommunications (DoT), has sought the adjustment of goods and services tax (GST) refund to the tune of Rs 8,000 crore against its dues linked to adjusted gross revenue (AGR), an official told Business Standard on Wednesday. Even as the letter listed a number of demands, including a moratorium of three years and a 15-year staggered payment of the AGR-linked dues besides asking the government to set off its GST credit, the company’s chief executive officer, Ravinder Takkar, called on DoT Secretary Anshu Prakash again — making it his third visit in a week.

In a day of fast developments, the DoT also had an internal meeting to work on a proposal that may provide relief to Vodafone Idea and the telecom industry as a whole. Deferred payment for future spectrum was one of the options on the table, a source pointed out. The Digital Communications Committee (DCC, earlier known as Telecom Commission), headed by the DoT secretary and having top officials from other ministries, including finance, as members, is expected to take up the shortlisted proposals for AGR relief in a meeting likely to be held in a few days. Meanwhile, Finance Minister Nirmala Sitharaman on Wednesday said she had held several meetings and the DoT was working on the AGR matter.

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The Voda Idea letter stated that though the company was not in a “sound financial state”, it could settle the balance of its self-assessed principal if a set-off of approximately Rs 8,000 crore worth of GST credits lying with the government was allowed. The company has also sought a staggered payment method for paying the balance amount of interest, penalty, and interest on penalty.

Both partners — UK-headquartered Vodafone as well as Kumar Mangalam Birla-led Idea — have maintained that the telecom joint venture would find it tough to continue as a going concern without any relief on the AGR front.
The company has so far paid Rs 3,500 crore in AGR dues. Its self-assessment showed that the firm was required to pay a total of Rs 23,000 crore, of which Rs 7,000 crore is the principal amount. The DoT calculation of Voda Idea’s AGR dues is estimated at more than Rs 50,000 crore, out of a total bill of Rs 1.47 trillion to be paid by some 16 telcos, many of which have gone out of business.
“It is vital to ensure that the telecom industry remains financially strong. There is thus an immediate need to rationalise the regulatory cost burden of the telecom sector,” VIL said. At a time when the government is looking at measures to bring the telecom sector back on track, the company has asked for a reduction in licence fee to 3 per cent from the current 8 per cent.

In 2016, the government had fixed the spectrum usage charge (SUC) at 3 per cent for future auctions and decided to allow a weighted average formula for all existing spectrum allocations with a floor of 3 per cent. Now, Vodafone Idea wants SUC to be reduced to 1 per cent from the current 3 per cent. “The root cause of the financial stress has been the below-cost pricing of the telecom services forced by competitive pressures. There was some increase in market prices in 2019, but that’s far from enough to cover costs. Further increase in price is unlikely without a floor price regulation,” the company said.

Pressing for a floor price, a concept that is being considered by the Telecom Regulatory Authority of India (Trai), Vodafone Idea said it must be immediately made effective with elements such as fixed connectivity charge as well as outgoing voice and data price. Currently, telecom tariff is under forbearance.