Whichever manner the adjusted gross revenue (AGR) case regarding telcos is going, the ultimate loser maybe the government. That is because the value of spectrum which is with the operators currently, their most important asset – of course, on lease from the government – has diminished.
If an operator like Vodafone Idea does not get to pay its AGR dues of Rs 58,000 crore in deferred instalments of 15-20 years as it has sought, it could need to file for bankruptcy and then the government stands to lose over Rs 2 lakh crore. The value of liberalized spectrum with Vodafone Idea presently – for the balance license period – stands at around Rs 98,206 crore based on the latest reserve price worked out by way of the Telecom Regulatory Authority of India (TRAI) for the following spherical of auctions.
Vodafone Idea owes the Department of Telecommunications (DoT) round Rs 2,45,934 crore if all of its dues are taken under consideration. Its dues due to deferred instalments for the spectrum it offered in diverse auctions is Rs 1,82,222 crore. This amount is payable until 2036. Also, its dues on account of one-time spectrum price (OTSC) is around Rs 5,712 crore.
The Supreme court has reserved its order regarding the timeline in which the company has to pay this. The Trai and the DoT have largely been at fault for the situation in which the government can’t cover its dues with the spectrum the operators have. Even though the DoT gets back the spectrum from insolvent telecom operators like Reliance Communications and Aircel, as it’s far arguing in the Supreme Court, it won’t be capable of recovering its AGR dues. For example, the AGR dues of RCom is around Rs 26,000 crore and the value of its spectrum based totally on its last license period is Rs 12,983 crore.
Although DoT gets back the spectrum it’s going to have to put it up for public sale to recover its dues. Here, for the reason that timing of auctions which remain uncertain because of the poor financial health of the operators, the value of spectrum might only further decrease.
This form of mismatch is because the Trai and DoT followed a practice of raising spectrum price for every year taking the very last price of previous auctions because the base charge, which caused an unnatural rise in costs. In contrast to today’s situation, the operators wanted spectrum. To make up for the astronomically excessive prices, DoT allowed operators to pay through deferred instalments while maintaining the net present value intact. As a result, nowadays the dues owed by the operators is much higher than the value of their spectrum.
