Telecom companies, especially Airtel and Vodafone, are set to further pressure in the country. On Friday, the Department of Telecommunications (DoT) directed all telecom licensees to make immediate payment of dues in compliance with the Supreme Court order of October 24 last year. The DoT’s Licensing Finance wing, has asked the telcos to pay their dues immediately.
In a letter to the telcos, it said: “This office letter from LFP of January 23, 2020 stands withdrawn with immediate effect. It is directed to take immediate necessary action in compliance with the judgement of October 24, 2019 of the Supreme Court.” As per the DoT calculations, Airtel has to pay Rs 35,500 crore, Vodafone Idea has to pay Rs 53,000 crore and Tata Teleservices has to pay a little over Rs 12,500 crore. Telcos owe Rs 1.47 lakh crore to DoT on account of pending AGR.
DoT on Friday withdrew its earlier directions granting protection from coercive action to defaulting telecom companies after the Supreme Court, earlier in the same day, took a strong view of non-compliance of its order on payment of statutory dues, and DoT‘s letter to telcos. The Supreme Court has also directed the Managing Directors and Directors of telcos and other firms to explain why contempt action be not taken against them for non-compliance of its order.
Telecom companies have been squeezed for revenues since the entry of Reliance Jio in 2016. The company have seen decline in revenue owing to cheaper data plans and free voice calling benefits across the board. While telcos have increased their tariffs recently, it is not expected to bring any immediate relief. AGR was seen as one of the biggest hurdle for telecom companies operating in the country.
Soon after the Supreme Court’s decision, Airtel had filed a curative petition. “The industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole,” the company had said in a statement. “The industry needs to continue to invest in expanding networks, acquiring spectrum and introducing New Technologies like 5G. The money now required to pay punitive interest, penalty and interest on penalty which forms nearly 75 percent of AGR dues would have better served the digital mission of the country.”