SC’s order disastrous blow for telecom industry: COAI

New Delhi (IANS) The mobile industry, led by COAI which has Airtel and Vodafone Idea as members, on Thursday rued the Supreme Court order upholding the Department of Telecom demand and ordering the telecom carriers, including Airtel and Vodafone Idea, to pay the government as much as Rs 92,000 crore in dues, which includes penalties and interest.

“This is a disastrous blow for the industry and may well be the last straw that breaks the camel’s back, given the precarious financial position of operators,” Cellular Operators Association of India (COAI) Director General Rajan Mathews told IANS.

Audit and Analyst firm EY said the new demand would hit the sector in network expansion, Digital India and sentiments.

“Telecom sector is under immense financial stress admitted by all stake-holders. Further demand of Rs 92,000 crore will dampen the sentiment of telecom operators and raising funds for broadband, network expansion and Digital India will hit a significant roadblock,” said Prashant Singhal, Emerging Markets, Technology, Media and Telecom Leader, EY India.

He added that the impact will not be limited to just telecom operators but will have a domino effect on larger digital value chain.

“This requires immediate intervention by all stake-holders to get the sector back in shape,” he said.

The sector is under heavy losses and has a debt of Rs 7.5 lakh crore.

Earlier, Airtel said government must review the impact of this decision as the telcos have invested billions and currently facing severe financial pressure.

“The Government must review the impact of this decision and find suitable ways to mitigate the financial burden on the already stressed industry,” an Airtel spokesperson said.

An Airtel statement said: “We are disappointed by the verdict of the Supreme Court. The definition of AGR has been a long standing dispute between the DoT and the Telecom Service Providers (TSPs) dating to 2005. The issue of inclusion of revenue from non-telecom activities and interpretation of the heads included in the definition of AGR under the license conditions has been through several rounds of litigation, which have been in favour of the TSPs till now.

“The telecom service providers have invested billions of dollars in developing the telecom sector and providing world-class services to consumers. This decision has come at a time when the sector is facing severe financial stress and may further weaken the viability of the sector as a whole. Of the 15 old operators impacted by the order, only two private sector operators remain in service today.”

The Supreme Court on Thursday ordered telecom carriers, including Bharti Airtel and Vodafone Idea, to pay the government an estimated Rs 92,000 crore in dues, which includes penalties and interest. In a significant judgment pronounced by top court on the scope of Adjusted Gross Revenue (AGR), a bench said that telecom companies will have to shell out the dues.

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