India's Supreme Court building in New Delhi on July 9, 2018. Photo: AFP

The Indian Supreme Court on Tuesday gave legacy telecom operators such as Vodadone Idea and Bharti Airtel 10 years to pay dues related to adjusted gross revenue.

A three-judge apex court bench directed the telecom firms to make a 10% upfront payment of their dues ahead of April 1 next year, when the repayment schedule will begin, and pay the 10 annual instalments by February 7 of every year. The telecom companies have also been told to submit personal guarantees in this regard within four weeks.

Vodafone Idea and Bharti Airtel had sought 15 years to pay the dues, while Tata Teleservices Ltd had requested 7-10 years. Reliance Jio Infocomm Ltd, which launched in September 2016, paid its relatively minuscule dues of 1.95 billion rupees ($26 million) in January.

Bharti Airtel has outstanding dues of $5.9 billion, of which it has cleared $2.4 billion, while Vodafone Idea has paid a little over $1 billion out of $7.8 billion.

Last October, the apex court had upheld the Department of Telecommunications broader definition of gross revenue and ordered telecom firms to pay levies based on that definition, along with interest on the principal amount and penalty. 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 court case dragged on for 14 years, with operators arguing that the revenue should be made up of income from telecom services. But the telecom department said it should include all revenue earned by an operator, including non-core telecom operations.

Favoring the telecom department, the court directed 15 telecom firms, including those which have shut shop, to pay 1.47 trillion rupees (US$ 20 billion) as dues within three months. In subsequent hearings, the court had rejected dues based on self-assessment by telecom firms and told them to pay as directed by the telecom department.

On the question of whether telecom firms could sell spectrum, the court has left it up to the National Company Law Tribunal. There is no clarity so far on the apex court’s decision on whether Reliance Jio would have to pay the dues of Reliance Communications, whose spectrum it is using, and whether Bharti Airtel would have to clear the dues of Aircel and Videocon for the same reason.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.