SC Order On AGR: Partial Relief Is Unlikely To Help The Telcos Fully
Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.
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By Sunil Garodia
First publised on 2020-09-03 20:28:51
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Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.
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On the face of it, the Supreme Court order granting 10 years to telcos for payment of their outstanding AGR dues in yearly installments might seem like a relief but for the telecom companies reeling under huge debt and extremely high government levies coupled with the lowest revenue per user in the world, it is only partial relief. The government and the companies had pleaded with the court to grant 20 years. That figure was arrived at after the government consulted all stakeholders and experts taking into consideration the extremely sensitive and vital nature of the service provided by the sector. But the court, in its wisdom, felt it was âexcessiveâ and reduced it to ten years. While one does not know what calculations the learned judges made to arrive at this figure, what one knows is that at least for Vodafone Idea, which suffered a net loss of Rs 73,878 crore last year, paying even 10 percent of the dues every year would be impossible if its promoters do not pump in additional capital or user rates are substantially increased.
If Vodafone Idea goes bust, the telecom sector will see a duopoly (in the private sector) that would fleece the consumer. With Airtel and Vodafone Idea in financial distress, Reliance Jio is already establishing a stranglehold on the market. While the other two are losing customers every month, only Jio is adding to its enormous user base. It has also announced six new plans that offer high speed and unlimited internet access, with free access to 10 or more major OTT platforms, at lucrative rates. It will be very difficult for the other two to match them without putting themselves under further, and crippling, financial stress. But when only two companies remain, low charges will be a thing of the past and profiteering would take its place. Then, the consumer will no longer be the king.
The telcos must file a review petition against the order. They must make the court aware of their acute financial stress and explain why they feel that 20 years would be a just time frame for the payment of the dues. The government must also pitch in and share the details of the consultations it held before making the plea. One is sure that the court will see light and grant the request. Simultaneously, the government must review the AGR structure and think of ways where only the core business of the telcos (as opposed to adding the other income to arrive at the figure now) can be considered for the same. It must also rationalize and reduce the levies imposed on the companies. If increasing digitization is the need of the post-Covid economy (with retail, education and financial services increasingly becoming dependant on the online delivery module, it also needs a healthy and competitive telecom sector in India. Otherwise, India will fall way behind.
