AGR dues: What Modi government may do with telcos if they fail to pay

You may call it a big action from Modi government likely in the offing! The Modi government may take action in terms of encashing the bank guarantees of Telecom Service Providers (TSPs) in case they "immediately" fail to pay their spectrum usage charges and the license fees in compliance with the Supreme Court order of October 24 last year, as per a report in IANS.

Last Friday, the Supreme Court came down heavily on the DoT for failing to recover average gross revenue (AGR) dues from the TSPs even after its direct order on October 24 last year.

Now, Airtel, which owes Rs 35,500 crore to the DoT, has said it would pay Rs 10,000 crore by February 20, and rest before the next hearing on March 17, adding that it is currently assessing the amount, Vodafone Idea on Saturday said it would pay its dues (Rs 53,000 crore) and is also assessing the amount.

In letters to different telecom circles, the zonal telecom units of the Department of Telecom (DoT) have not explicitly raised the issue of encashment of bank guarantees in the communications to the TSPs, but they have mentioned "necessary action under the Licensing Agreement without any further notice" which indicates towards two courses of action -- either encashment of bank guarantee, or cancellation of license, the report added.

In a letter to all the telecom service providers under Gujarat telecom region, the DoT's Office of the Controller of Accounts has said "with respect to payment of License fee and spectrum usage charges in compliance with the Supreme Court judgement of October 24, 2019, You are directed to make an immediate payment of license fee and spectrum usage charges (SUC) along with interest, penalty and interest and penalty (if applicable) for the Gujarat Telecom Circle. If dues are not paid immediately, necessary action will be taken in terms of the provisions of the license agreement without any further notice. This may be treated as 'Most Urgent'".

Similar letters have been issued by the Rajasthan as well as the Kolkata Telecom Circles of the DoT to the TSPs under their respective circle.