Want to reconsider the appeal against the decision TDSAT, Telecom News, ET Telecom
A two-judge bench led by Judge MR Shah has set the next hearing for November 17, but told Solicitor General Tushar Mehta the government should “satisfy” the court, which will “have to take into account the broader public interest. “.
Tuesday’s decision is a clear signal that the government intends to reduce litigation in the telecommunications sector as part of continued efforts to improve the health of operators, experts said, and comes just over two weeks. after the announcement of a full back-up plan. The development has boosted the shares of Bharti Airtel and Vodafone Idea, which could lead to a significant reduction in OTSC liabilities.
Levy of Rs 40,000 crore involved: DoT
ET reported on Oct. 5 that the government is considering an out-of-court settlement process to ease the litigation burden on the telecommunications industry as part of the next phase of reforms.
“The central government wishes to review and / or reconsider its decision to continue with these appeal proceedings,” the DoT said in its affidavit to the Supreme Court on Tuesday. “It is suggested that given the nature of the issues involved, this decision will have to be made after careful consideration at different levels, which may take a reasonable amount of time.”
ET saw a copy of the affidavit.
The DoT said the case involved a levy of around Rs 40,000 crore, subject to arbitration, in a sector where telecommunications operators are suffering losses. He added that the banks have written to the government to ease the financial stress on the industry, otherwise they would suffer heavy losses due to their exposure to the sector.
The amount reflects the CSTO based on the market price of the spectrum allocated above a certain threshold without auction, includes interest and penalties on interest, and was levied on several telecom operators, of which only Airtel and Vodafone Idea are currently operational. The other private telecommunications company, Reliance Jio Infocomm, got all of its airwaves through auctions, which began in 2010.
The government said the decision to review its appeal in the OTSC case was made with the recent aid package offered to the industry in mind. The cabinet “took various decisions to promote the public interest, protect government revenues and more specifically, encourage competition among telecommunications service providers (TSPs) by preventing a situation where the viability of some TSPs would become unsustainable, resulting in a monopoly situation and other negative impacts on the economy, ”he said.
Given the circumstances, the government asked the Center three weeks to make an “informed decision” whether or not to proceed with the pending appeal.
Vodafone Idea stock closed up 1.2% at Rs 11.57, after hitting an intraday high of Rs 12.23, while Bharti Airtel finished up 2.7% to Rs 699.25 , after its intraday high of Rs 703.35, on BSE on Tuesday.
The battle for the CSTO began after the Supreme Court overturned 122 telecommunications licenses in 2012 as part of the 2G scam, declaring the airwaves to be public goods best sold at auction. Prior to 2010, spectrum was allocated with telecommunications licenses for a payment of Rs 1,658 crore. Telecommunications operators then received additional slices of spectrum after reaching a certain subscriber base in a circle.
The cabinet, after the 2012 decree, decided to levy an OTSC linked to market prices. He ordered that a telephone company holding more than 6.2 MHz per circle between July 2008 and December 2012, must pay a single market-related price for the excess spectrum held. Likewise, telecom operators were required to pay the market price for radio waves above 4.4 MHz per circle between January 2013 and the expiration of their licenses.
In July 2019, the Telecommunications Dispute Settlement and Appeal Tribunal (TDSAT) supported the operators’ appeal by ruling that the CSTO could be viewed prospectively, not retrospectively, and that there must be a wave restitution mechanism. The DoT, which also wanted to collect the charges retroactively, appealed the order of the highest court, which did not stay the TDSAT decision.
The DoT has so far set Airtel’s OTSC dues at Rs 8,414 crore. The telephone company said it recorded a charge of Rs 1,807.5 crore to OTSC in FY20, with the balance of Rs 6,606.5 crore being recognized as a contingent liability. Vodafone Idea said the OTSC accruals up to the end of March this year were Rs 4,389.8 crore, which was provided to it in its financial statements.
The DoT decision “appears to be yet another step to rectify past anomalies,” said Sameer Chugh, partner at law firm Cyril Amarchand Mangaldas. “Clearly, signs of recovery and future growth in the telecommunications sector will also boost the overall economy. This will give telecom operators like Airtel and Vodafone additional relief from amounts owed to DoT in the past and allow investment in technologies like 5G. “
Such efforts could lead to a drop in litigation, paving the way for a greater focus on business, he said.
An official told ET that a mechanism similar to the Vivaad se Vishwas (VSV) tax settlement scheme could be a good way to reduce litigation in an industry that has seen the government and operators compete legally at virtually every step, in particular on the interpretation of the license. conditions.
The move follows the cabinet’s recent decision to impose a spectrum moratorium and Adjusted Gross Revenue (AGR) charges for telecom operators, remove spectrum usage fees from upcoming auctions, reduce bank guarantees and other provisions aimed at alleviating “financial stress” in the telecommunications sector. .