Pratap Vikram Singh

Till about a fortnight ago, it appeared that the survival of the number three telecom operator in India, Vi (formerly Vodafone Idea), was  dependent  on the government and the market leader, Reliance Jio. For cash-strapped Vi, which failed to onboard investors in the last year  and is not in a position to raise tariffs unilaterally, the ball was in the government&rsquo s court. Now that has reversed.

There is a new bargain between the telco and the government. The government is preparing a relief package, and it&rsquo s public knowledge now. 

However, it  expects  Vi&rsquo s promoters to give an assurance of their commitment to invest and explain their strategy for the next few years. In the past, the promoters have publicly reiterated time and again about their unwillingness to invest any further in the telecom venture.

At the moment, there are a range of options on the policymakers&rsquo table. We already know that it is considering rationalisation of levies&mdash a demand endorsed by the Telecom Regulatory Authority of India (Trai) way back in 2015&mdash and extension of the moratorium on spectrum payments for a couple of years. 

The Ken  has learnt that one of the possibilities now being considered is to allow telcos to pay the AGR (adjusted gross revenue) dues over a period of 20 years. A source close to the government told  The Ken  that this could be done through bringing an ordinance (as parliament is not in session) to effectively overturn the Supreme Court&rsquo s judgement. The apex court had given the telcos a time frame of 10 years to pay their AGR dues.

The Department of Telecommunications (DoT) had originally submitted to the SC, with the cabinet&rsquo s approval, that the telcos could pay their AGR dues over a 20-year period. &ldquo If the cabinet agreed to a 20-year period and the court didn&rsquo t, the cabinet can always issue an ordinance,&rdquo the source said. 

The government did something similar to overturn an SC judgement in the case of state governments&rsquo right to make their own list of socially and educationally backward classes (SEBC) aka OBC. On 9 August, the government introduced a bill that aims to restore states&rsquo power to make their own OBC list. 

&ldquo In the same bargain, the government can also look at reducing interest rates (for AGR payments),&rdquo the source added. Because taking another look at the possibility of arithmetical errors in the computation of AGR dues is not in the hands of the government and is solely dependent on the court, the source quoted above said. 

The government is also actively considering softening its stand on the one-time spectrum charge (OTSC) case which it has been contesting in the SC. Following the SC&rsquo s cancellation of 122 telecom licences, the earlier UPA government had introduced some rules.   

These rules said that all operators holding spectrum of more than 6.2MHz per circle between July 2008 and December 2012 would pay a one-time market-linked price for additional spectrum. This was a retrospective move. Also, prospectively, the operators holding beyond 4.4MHz per circle were required to pay for duration starting from January 2013 till end of the respective licence duration.

Subsequently, telcos challenged DoT&rsquo s OTSC levy in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). In July 2019, the tribunal ruled that the government couldn&rsquo t levy OTSC retrospectively, potentially bringing down liability of telcos by 60% in the case. The government has challenged the TDSAT ruling in SC, which is yet to give its final judgement. 

The government can now settle the litigation once and for all, the source said. In 2012-13, the DoT had issued demand notices for Rs 25,000 crore (~US$3.3 billion) from all telcos. Under the contested rules, Vi owes roughly Rs 7,000 crore (~US$1 billion) to the government. Airtel has marked Rs 5,590 crore (~US$751 million) as an exceptional item (for OTSC) for the year ended March 2021. 

If Vi dies, Indian telecom effectively turns into a duopoly. And that&rsquo s something the government has repeatedly said, at least publicly, that it doesn&rsquo t want. Extending the timeline for payment of dues and reducing the interest rate charged on it seems to be the only way to keep Vi plodding along. It remains to be seen, however, if Vi&rsquo s promoters will change their stance and continue to invest in the telecom venture.