The Indian government has revealed that it has received partial payment of the adjusted gross revenue dues that the mobile phone service providers owe to the telecom department as ordered by the Supreme Court.
Minister of State for Communications Sanjay Dhotre stated in Parliament that the government has so far received 259 billion rupees and the government has directed the operators to make full payment. Some 15 telecom companies need to pay around 1.47 trillion rupees (US $20.6 billion).
The minister said in a letter dated March 4 that it has directed the telecom operators to make full payments in accordance with the order of the Supreme Court dated October 24, 2019. He informed Parliament that Bharti Airtel has paid 180 billion rupees and Vodafone Idea has shelled out 35 billion rupees. The now defunct Tata Teleservices has paid about 42 billion rupees, while Reliance Communications has paid 39 million rupees. Reliance Jio has paid about 1.95 billion rupees.
In response to another question on whether the government has any plans to enact new anti-trust laws to prevent monopolies or cartels in the telecom sector, Dhotre said, “No such proposal is under consideration.” Regarding financial distress in the telecom sector, he said the Cellular Operators Association of India has sought government intervention to avert an unprecedented impact on the financial health of its member companies.
The Minister pointed out that the government had already offered a moratorium to the telecom companies to defer payment of the spectrum auction installments dues for 2020-21 and 2021-22.
Last Friday, Vodafone Group Plc Chief Executive Officer Nick Read visited India and held separate meetings with Finance Minister Nirmala Sitharaman and Telecom Minister Ravi Shankar Prasad to ask for government help to keep it afloat.
Read kept a low profile and avoided giving any comments to journalists after meeting the ministers. Press Trust of India quoted sources saying that the telecom minister has assured Read that the government is against a monopoly in the telecom sector and wants Vodafone Idea to survive.
The chief of the UK-based telecom giant is making frantic efforts to save its loss-making Indian joint venture, whose very survival is in question. The Supreme Court order has hurt Vodafone Idea the most and the troubled firm needs to pay over 530 billion rupees ($7.45 billion) as license fee, spectrum usage charge, interest and penalty dues to the department.
Even before the court order came in October last year, the company was reeling under a price war unleashed by Reliance Jio Infocomm, owned by India’s richest man, Mukesh Ambani. Vodafone Idea has around 300 million subscribers.
The Supreme Court had on October 24 last year widened the scope of adjusted gross revenue to include income from non-core items. The dispute arose when telecom companies migrated to a new system offered by the government in 1999, under which operators agreed to share a certain percentage of revenue with the government.
This legal case dragged on for 14 years, with operators arguing that the revenue should be made up of income from telecom services. But the Department of Telecommunications said it should include all revenue earned by an operator, including non-core telecom operations. The court delivered its judgment in favor of the department.
The government had recently told the companies to make a self-assessment of dues linked to adjusted gross revenue. So far Bharti Airtel, Vodafone Idea and Tata Teleservices have done so, and the amount they have arrived at is a fraction of what the government had estimated. The government has indicated that it would take at least six months to evaluate the companies’ claims as they need to go through numerous documents for multiple years.