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Wednesday, October 6, 2021

Spectrum user fee arrears case: Government may waive off 40000 crore dues of telecom companies

The government is contemplating to withdraw the legal case against telecom companies involving disputes worth around Rs 40,000 crore. For this, the Department of Telecom has sought three weeks' time from the Supreme Court so that the government can take a thoughtful decision whether to proceed with the current appeal or not.

Telecom Spectrum (Indicative Image)

The government is preparing to give relief to telecom companies in the spectrum user fee arrears case of about Rs 40,000 crore. A source said that the DoT has filed an affidavit in the Supreme Court in a case against Anil Ambani's Reliance Communications, stating that the government is reviewing the process of charging spectrum user charges from these companies.

In fact, the government is contemplating to withdraw the legal case against the telecom companies related to the disputes of about Rs 40,000 crore. For this, the Department of Telecom has sought three weeks' time from the Supreme Court so that the government can take a thoughtful decision whether to proceed with the current appeal or not. The department also requested for adjournment of the hearing in the matter by four weeks.

The top court gave its approval. The next hearing will be on November 17, 2021. In an affidavit filed on October 4, 2021, the department said that the telecom sector has been going through financial crisis for some time due to various circumstances and the telecom service providers are running into losses. It cited the Indian Banks' Association memorandum to say that adverse developments in the telecom sector can lead to problems like failure, eroding competition, monopolies, unstable operations. This can cause serious damage to the banking system, Which has a huge risk in this area.

12,803 crore dues on Airtel-Voda Idea
  • Telecom companies owe a total of Rs 40,000 crore as spectrum user charges.
  • In this, Bharti Airtel has the highest dues of Rs 8,414 crore.
  • Vodafone-Idea owes Rs 4,389 crore one time spectrum charges. Other spectrum cases are under review.
  • Apart from this, Vodafone-Idea had a total debt of Rs 1.92 lakh crore in the June quarter.This includes spectrum charges, adjusted gross revenue (AGR) dues and bank dues. Out of these, spectrum fee arrears are about 1.06 lakh crore.
Prayas will boost investment in 5G technology

Sameer Chugh, partner of Cyril Amarchand Mangaldas, said the DoT has sought time from the Supreme Court to review its decision to proceed with the appeal against the Telecom Disputes Appellate Tribunal (TDSAT) order in the Reliance Communications case. This is a step towards removing the past anomalies. This effort of the government will give relief to the telecom sector and it will move on the path of reforms, which will give a boost to the economy. He said this would ease the road ahead for telcos like Airtel and Vodafone, allowing them to focus on investing in technologies like 5G.

Government has already given relief

On September 15, 2021, the government had announced relief for telecom companies facing financial crisis. Apart from this, 100 percent foreign investment was also approved in the telecom sector coming through the automatic route. The DoT said the relief was announced to these companies to promote public interest, save government revenue and increase competition, especially among telecom service providers.

This is the case

In fact, in 2012, the Supreme Court canceled 122 telecom permits in the 2G scam case. The court said that this public property should be allotted through auction. The then cabinet decided that a one-time spectrum user fee of Rs 1,658 crore would be charged from the telecom company on spectrum allocation for pan-India licenses. Earlier this fee was linked to the number of consumers. In the UPA-II government, this policy was changed to say that all spectrum above 4.4 MHz would be charged at the market rate. Telecom companies opposed this.

Thereafter, the matter reached TDSAT, which in July 2019 ordered that dues of previous years from companies cannot be charged under the new rule and it will be applicable from a later date. This order was challenged by the Department of Telecom in the Supreme Court. Now the government wants to settle the issue out-of-court by abolishing the existing spectrum user fee system.