On Wednesday, the Supreme Court dismissed the telecom companies' request to re-calculate adjusted gross revenues (AGRs) in the context of an ongoing dispute regarding their outstanding payments to the government. The companies expressed worries about the financial crisis impacting the entire industry.

Vodafone India, Bharti Airtel, and other telecom companies submitted a curative petition challenging the Supreme Court's October 2019 ruling, which mandated that they pay the government ₹92,000 crore within three months. Their current petitions contest a September 2020 order that stipulated the payment of AGR dues over a ten-year period, with 10 percent of the total due by March 31 each year.

In their latest petition, the telecom firms asserted that the Department of Telecommunications (DoT) made a significant error in calculating these dues, including licence fees and spectrum charges.

Reports suggest that the Department of Telecommunications (DoT) has calculated AGR dues exceeding ₹1 lakh crore, with Airtel estimated to owe ₹43,980 crore and Vodafone ₹58,254 crore. However, according to the companies’ own calculations, Airtel claims it owes only ₹13,004 crore, while Vodafone asserts its dues are just ₹21,533 crore. Similar recalculations have also been made for other companies, including Tata Teleservices. The telecom firms have raised concerns about the court's "arbitrary penalty."

The computation of AGR forms the basis for revenue-sharing between telecom companies and the government, which collects funds for granting licenses and spectrum usage. The DoT calculates the government's share as a percentage of the AGR, amounting to three to five percent in spectrum usage fees and eight percent in licensing fees.

The calculation of AGR has been a contentious issue for nearly two decades, with telecom companies arguing that it should only encompass core revenue. In contrast, the government includes all revenue streams, even those from non-telecom sources, in its calculations.

In 2019, the Supreme Court sided with the government, ordering telecom firms to pay ₹92,000 crore within 180 days, a decision that significantly impacted the industry, leading to record losses for both Vodafone India and Bharti Airtel shortly thereafter.

In July 2022, Airtel announced its decision to defer payment of approximately ₹3,000 crore in AGR for the financial year 2018/19—amounts not included in the 2019 court order—by four years. A week earlier, Vodafone also decided to defer an additional ₹8,837 crore in AGR dues for the same period. This followed a demand from the DoT for AGR payments for two financial years beyond 2016/17, which were not addressed in the Supreme Court's ruling.

Case Title: Vodafone Idea Limited v. Union of India, Curative Petition (Civil) Nos. 231-337/2023 (and connected cases)