Cost of U-turn

The government's U-turn on the Supreme Court-mandated payment of Adjusted Gross Revenue (AGR) by various Telecom Service Providers (TSP) is certainly a breather for companies reeling under pressure to submit pending dues in time. The relief on AGR dues also gave impetus to market sentiments as stocks gained following the Centre's decision to give TSPs a 20-year window to pay the money back against the mandated 3-month window as per the October 2019 order of the Supreme Court. The Centre has likely come up with a formula to allay fears of TSPs largely in view of the current economic environment of the country. Centre has hailed that the decision was made following deliberations on various levels of the government in the administrative hierarchy. That likely included the consideration of financial health of the telecom sector as well as the competition that exists which would be severely affected should any of the TSPs drop due to the pressure of AGR dues. Of course, the government also took note of the e-governance projects in various fields that rests on the telecom companies as well as the huge connectivity net that all of them collectively cast on the country. Following the SC order, a sum of Rs 1,69,048 crore from 16 major TSPs was due in October. Till March 6, 2020, Rs 25,901 crore was received as dues from TSPs with outstanding dues of Rs 1,43,271 crore. Now that they have a relatively relaxed window to pay their dues, TSPs can focus on strengthening their infrastructure and preparing for the arrival of 5G in India. Their shares have risen and the new formula is likely to allay remaining fears of urgent payment. Centre's relief is laudable but confusing. While it is done in the interest of economy, telecom sector and the Centre's rural digitisation project, the same could have been done earlier. The economic slump was visible back in October during Supreme Court's order as well while Centre's digitisation push and affirmation of level playing field in the telecom sector were factors even back then. Such a manner of deliberation at levels of administrative hierarchy would have yielded the same result back then. In fact, it would not have allowed telecom shares to plummet and also allowed the government to direct its attention to more pressing needs of the economy. The entire legal adventure with the TSPs in the Supreme Court was to make the latter pay its dues on time. A well-versed assessment would have laid out the same facts that the government came to notice in March. Centre's legal battle with TSPs, therefore, does not seem to yield much in this regard apart from being a waste of time.

There is no doubt that the Centre's AGR relief counts as a measure of caring governance. Of course, the well-being of the telecom sector is in the interest of the country but given the judicial pursuit that spanned over five months, it is to wonder if the time could have been saved in the legal suit that spanned over five months. And, the same was expected of a pro-digitisation government that can also be credited with a regime of lowest mobile data rates that the country has ever seen, even by global standards. Without a doubt, the move favours TSPs like Vodafone-Idea that were in a relatively adverse situation that Bharti Airtel when it came to paying outstanding dues. Both, however, will now be in a relatively comfortable spot as the financial closing dawns.

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