DoT seeks to reduce litigations with telcos; up to Rs 80,000 crore stuck in disputes


The Telecom sector has witnessed unprecedented variety of authorized battles in the previous yr, be it towards TRAI’s penalties or spectrum utilization costs. The buzz is {that a} whopping Rs 80,000 crore is stuck in disputes with operators.

Given that the litigations usually are not solely hurting stability sheets but additionally deterring abroad buyers, sources in the know informed The Economic Times that the Department of Telecommunications (DoT) is now drawing up proposals geared toward lowering them considerably.

According to authorities officers, the DoT will ship its solutions to the regulation ministry for vetting earlier than the communications ministry takes a last name. “The telcos have a different point of view and this has led to a large amount of Rs 75,000 crore- Rs 80,000 crore, including penalties and interest, that’s stuck in legal battles,” defined one, including, “We do not want the government to lose out on dues that the operators owe us.”

The proposals floated by the DoT reportedly embrace combining all Telecom levies into one cost, on the traces of the GST that subsumed oblique taxes. Most of the disputes relate to a number of levies beneath completely different heads reminiscent of licence charges, spectrum utilization costs (SUC) and one-time spectrum payment (OTSC). Rationalisation of taxes and levies was additionally among the many key factors included in the draft National Digital Communications Policy (NDCP) 2018.

The division might also counsel being lenient on minor infringements, as a substitute of slapping most penalties throughout the board, and figuring out circumstances that may both be settled or withdrawn the place the bone of competition is now not related due to new know-how or new insurance policies.

Rajan S Mathews, director common of the Cellular Operators Association of India (COAI) foyer group, informed the each day that the federal government may additionally take a look at implementing an “adjudicatory/alternate dispute settlement process where government officials are empowered to settle cases/disputes in good faith, before going to litigation, without fear of being second-guessed later by audit agencies.”

More than anything, the DoT and Telecom Companies have been at loggerheads over the scope and definition of Adjusted Gross Revenue, on which licence charges and different costs are paid to the federal government. Around Rs 25,000 crore of the dues stuck in litigation reportedly pertains to SUC alone. Bharti Airtel’s dues up to June stands at Rs 8,243.85 crore whereas Reliance Jio Infocomm owes Rs 116.51 crore and Reliance Communications and its subsidiary Reliance Telecom owe Rs 2,594.45 crore and Rs 519.32 crore, respectively.

Though numerous judicial authorities have checked out completely different points of the AGR challenge a number of instances over the previous 17-odd years, a proper definition is but to be fastened. And due to that ambiguity, all associated levies additionally get challenged and stayed by numerous courts or the Telecom tribunal. To deal with this downside, sources declare that the DoT is wanting to set a clearer definition of AGR.

The bleeding business is hoping for a speedy decision on these proposals because the lingering litigations additionally delay merger and acquisition offers. That’s as a result of when telcos need to commerce spectrum or embark on an M&A, the DoT raises calls for for previous dues that want to be cleared earlier than any approval. For occasion, Vodafone India and Idea cellular paid a mixed Rs 7,249 crore in dues earlier than they might get approval for his or her current merger. Many telcos additionally determine to transfer court docket looking for a keep on such calls for, prolonging your complete course of.

“When we raise money in global bond markets, investors think twice before agreeing because why would you invest in a company knowing thousands of crores are stuck in legal battles with the government?” a senior govt at one of many main telcos informed the each day. “Who would want to invest when the case can go either way?” According to operators, there have been casual talks on methods to ease this case.

COAI’s annual report for FY18 famous that the Telecom operators are in “severe financial distress” with a cumulative debt of Rs 7.7 lakh crore and income beneath Rs 2.5 lakh crore. At such a time, the DoT’s proposals, if handed, would come as a breather.

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