After SC rap, DoT orders telcos to clear dues immediately
New Delhi, Feb 14 () After Supreme Court rap, the telecom department on Friday began issuing orders, asking firms such as Bharti Airtel and Vodafone Idea to clear past dues immediately.
The DoT, which faced the ire of the Supreme Court for putting on hold recovery of dues from telecom companies, started issuing circle or zone-wise demand notices to firms, according to the order copies reviewed by .The Supreme Court had asked companies to clear dues, totalling an estimated Rs 1.47 lakh crore, before the next date of hearing on March 17.Advertisement
Airtel responded to DoT order by offering to pay Rs 10,000 crore by February 20 and the remaining before March 17. Airtel owes nearly Rs 35,586 crore, including licence fee and spectrum usage charge, to the government.
There was no word from Vodafone Idea, whose chairman Kumar Mangalam Birla had last month stated that the company will fold if it is forced to make payment of over Rs 53,000 crore dues. India has been divided into 22 telecom circles or zones for the issue of licenses to operators. And their revenues are calculated circle-wise.And so, the DoT issued circle wise demand notices to telecom firms.
An order for the UP (West) Telecom Circle asked "all telecom service providers" to clear dues by 11.59 pm Friday.It asked companies to "make the payment of outstanding dues of licence fee and spectrum usage charges by 14.02.2020, 11:59 PM positively".Another order issued for the Rajasthan circle sought "immediate" payments, failing which action would be initiated. It sought "immediate payment of due licence fee and spectrum usage charges along with interest, penalty and interest on penalty (if applicable)" and warned that if the dues are not paid immediately, "necessary action will be taken in terms of the provisions of licence agreement without any further notice".Advertisement
"This may be treated as most urgent," it added.
Prior to issuing the demand orders, the DoT withdrew its order which restrained action against any of the companies who fail to pay up dues by the Supreme Court-mandated deadline of January 23.The direction by the DoT says its previous order dated January 23, 2020 "stands withdrawn with immediate effect".Advertisement
"It is directed to take immediate necessary action in compliance with the judgement dated October 24, 2019 of the Supreme Court," said the fresh order issued by the DoT immediately after the Supreme Court took a strong view of non-compliance in payment of dues.
In all, 15 entities owe the government Rs 1.47 lakh crore -- Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.Airtel owes nearly Rs 35,586 crore, including licence fee and spectrum usage charge, to the government.Advertisement
Bharti Airtel on Friday offered to pay the Department of Telecom Rs 10,000 crore by February 20 and the rest of the dues before the next date of hearing on the adjusted gross revenue case in the Supreme Court.
"Nevertheless, in compliance with the judgement of the Hon'ble Supreme Court and their direction today, we shall deposit a sum of Rs 10,000 crore (on account) by 20th February, 2020, on behalf of the Bharti Group companies," Airtel said in a letter to Member (Finance) at the DoT.Airtel said that as directed by the Member (Finance), the company is in the process of completing the self assessment exercises.Advertisement
"You will appreciate this is a complicated process, covering 22 circles, multiple licenses and a substantial period of time and hence, is time consuming," the letter said.Telecom operators were required to clear their dues by January 23 as per the apex court judgement of October 24, 2019 in the matter. On Friday, the SC 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 to pay adjusted gross revenue (AGR) of Rs 1.47 lakh crore to the telecom department.At present there are three private players in the Indian mobile market -- Bharti Airtel, Vodafone Idea and Reliance Jio -- besides the ailing state-owned operators BSNL/MTNL.Advertisement
Vodafone Idea Ltd in its earnings statement on Thursday had also sounded out warnings on "material uncertainty" casting "significant doubt" on its ability to continue as a going concern.
VIL had suffered staggering Rs 50,922 crore loss in the September quarter (highest ever loss posted by any Indian corporate), when it had made provisions for the statutory dues, although its losses in December quarter stood at Rs 6,439 crore.BofA Securities, in a note on Friday noted "overhang on VIL" and questioned if India is inching to a two-player market.Advertisement
"VIL is not in a position to be able to make the USD 3 billion payment upfront, while the recent QIP by Bharti makes them better placed to do so. If therefore it finally comes to the telcos making an upfront payment - VIL may look to shut shop, and in that event we see the possibility of government intervention to resolve the situation," it said.
"Every incremental decision pushes India to a two-telcos market," it added.Market watchers, meanwhile, said in event of any further consolidation in the market, the tariffs could well rise 10-25 per cent.Advertisement
Bharti Airtel's liabilities added up to nearly Rs 35,586 crore. But, Airtel had already said that the previously-mentioned material uncertainty on the group's ability to continue as a going concern "no longer exists" after the recent Rs 21,502 crore fund raising by it. MBI ANZ BAL
(This story has not been edited by Business Insider and is auto-generated from a syndicated feed we subscribe to.)
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