The recent SC judgment on AGR dispute has created ripples in the telecom sector. The reason – the telecom companies have to pay huge sums of amount (billions of dollars of unpaid license fees), and that too with interest and penalties (multiple times the principal). This has put the viability of the players at risk, thereby jeopardizing the telecom sector at large. The purpose of this note is to analyses whether SC’s interpretation of the telecom license the real intent of DoT, or the same got stretched too far by the lawyers, and conceded to by the supreme court.
Background
In order to understand the DoT’s intent, one needs to evaluate the circumstance under which the telecom licenses were revised, i.e the “revenue share” regime substituted the earlier “fixed license fee” regime. At that time, the telecom companies were struggling to survive. They did not have money to pay license fees (fixed in nature) that emanated out of their overenthusiastic bidding. Therefore, the DoT, in the interest of the overall sector, converted the “fixed license fee” regime to “revenue share”. The idea was to remove all barriers to growth – especially the high license fee, which was preventing the operators from making the much-needed investments. The “revenue share” regime enabled the operators to pay license fees in proportion to their growth.
