Telcos Pay Part Of Government Dues, RBI Flags Fresh Concern

The Supreme Court turned down Vodafone Idea’s proposal to pay Rs 2,500 crore by the end of the day and Rs 1,000 crore by Friday.

New Delhi: Debt-ridden telecom firms have paid part of the Rs 1.47 lakh crore they owe to the government as the Reserve Bank expressed concern today about the possibility of their defaulting on bank loans. Bharti Airtel made a payment of Rs 10,000 crore today. Vodafone Idea and Tata Group have already paid their share. The telecom companies — which have been struggling with huge losses — paid up after the Supreme Court warned that their bosses could be accused of contempt and ordered them to appear in court today. In a hearing last week, the court had ripped into the firms and the government over the dues remaining unpaid despite its order. Finance minister Nirmala Sitharaman said she would get in touch with the telecom department and find out what position it wants to take on the arrears.

Here are the Top 10 points in this big story:

1. Bharti Airtel paid Rs 10,000 crore to the telecom department today. Vodafone Idea and Tata Group have made part payment of about Rs 2,500 crore and over Rs 2,197 crore.  According to the Telecom Department, Airtel owes a total of 35,586 crores. After paying 10,000 crores today, it still has to pay around 25,586 crore. Vodafone owed a total of 53,000 crores. After today’s payment, It still has to pay around 50,500 crore. Tata Teleservices has to make a total payment of 13,800 crore. The deadline for the payments is March 17.
2. Asked about the road ahead, Union finance minister Nirmala Sitharaman said, “The Department of Telecommunications is actively engaging with telecom companies after Supreme Court order. I will hear from the department what position it wants to take on matter,” reported news agency Press Trust of India.
3. With concern that the telecom companies, under pressure to pay the government, may default on existing loans, Reserve Bank of India Governor Shaktikanta Das said they are “very closely” monitoring the situation.
4. “With regard to the impact on the banking sector, we are very closely monitoring it. It all depends on how the companies concerned are able to make the payments and when they are able to make the payments,” he was quoted as saying by PTI.
5. Earlier today, the Supreme Court turned down Vodafone Idea’s proposal to pay Rs 2,500 crore by the end of the day and Rs 1,000 crore by Friday. The company had also suggested that in return for the payment, no coercive action be taken against it – which the court also rejected. The company had also asked that the bank guarantee it deposited with the government not be encashed.
6. Last Friday, the Supreme Court said it would “initiate contempt against the officer and the companies”. “Not a penny has been deposited… Is it not the outcome of money power? We don’t know who is creating this nonsense, is there no law left in the country?” the judges said.
7. After being pulled up by the Supreme Court, the telecom department had withdrawn its order of January 23 that no coercive action will be taken against the telecom companies for defaulting on payments.
8. In October, the Supreme Court upheld the telecom department’s demand that wireless carriers pay Rs 92,000 crore, and gave telecom operators three months to clear the dues. Last month, the court rejected the companies’ appeal to review the decision.
9. Telecom providers pay the government 3-5 per cent of their AGR (adjusted gross revenue) in spectrum usage charges and 8 per cent as licence fees. The firms have long argued that the AGR should comprise just revenue accrued from core services. The government says it should include all revenue.
10. Over the last years, the telecom sector has been struggling with losses accumulated to stay competitive. A few companies had to fold up under debt. In December, Vodafone Idea Chairman Kumar Mangalam Birla said the company might have to “shut shop” if there is no relief on the statutory dues. “If we are not getting anything, then I think it is the end of the story for Vodafone Idea,” he had said.