Shares of Bharti Airtel Ltd plunged nearly 10 per cent, while those of Vodafone Idea Ltd dived over 20 per cent in intra-day trade on Thursday after the Supreme Court rejected the definition of AGR (adjusted gross revenue) as proposed by telecom companies and upheld the government’s Rs 92,000 crore tax demand from these operators.
However, Bharti Airtel shares had recovered all losses to trade in the green by late afternoon. At 2:37 pm, the Bharti Airtel stock was trading at Rs 363.70, up 1.1%, while Vodafone Idea was down by 18.6% to Rs 4.60.
Calculation of AGR is important as both spectrum charges and licence fees paid to the government are calculated on the basis of this metric. Put simply, any rise in AGR means higher levies to the government.
So, the apex court has ruled that all revenues accruing to telecom companies, except for termination fee and roaming charges, will be a part of the AGR. Telcos, meanwhile, were arguing that non-telecom and non-core revenue should not be a part of the AGR.
According to the department of telecommunications (DoT), Bharti Airtel owes Rs 21,682.13 crore as licence fee to the government, Vodafone Idea owes Rs 19,823.71 crore, while Reliance Communications owes Rs 16,456.47 crore.
The computation of AGR has been a point of contention between the government and the industry for the past 14 years. Both the department of telecommunications and telecom companies have been battling to put forward their case on computation of AGR at various courts.
The apex court has now made it clear that there would be no further litigation on the issue and it would fix a time frame for calculation and payment of dues by the telecom companies.
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