14 February 2020 was not that dreamy to the telecom industry as they faced a sudden doomsday due to the supreme court session which escalated the payment of AGR dues. Airtel sent a letter to the DoT and promised to clear off the total debt of 21,682 crores by march 17 2020. And paid a sum of 10,000 crores on Saturday, Vodafone Idea has a total debt of 19,823 crores of which 2500 crores have been cleared, and reliance telecommunication owes a total of 16,456 crores.

All this due clearance to the telecom industry has cost heavily on the stocks of the companies.

What is AGR that has made the entire telecom industry come on a standstill? AGR which under the revised rules of the government, the telecom industry had to share a part of their adjusted gross revenue with the government and it includes the license fees and
spectrum usage charges. The rules are clear in reading but there is a dispute wedged over it causing all the turmoil. The definition of AGR isn’t clearly stated causing all the confusion. According to the DoT (Department of telecommunication), the definition of AGR includes the earning from the telecom and non-telecom operating service of the company. But the company’s plea that the AGR should be only from the core services and not from its dividend, interest and other profits. After series of battles in the supreme court, the definition given by DoT was accepted and the telecom companies have to pay a total of 92,641 crores which contains an interest of 41,650 crores and penalty of 10,923 crores.

The worst-hit of the three telecom industries is Vodafone Idea, as the bank guarantees won’t be able to provide the funds to clear off the dues that it owes DoT and they can file for insolvency and bankruptcy. According to the rule, the bank can only provide guarantees of only 2500 crores per telco.

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