The pleas of the Indian operators have once again fallen on deaf ears, with the Court refusing to recalculate the enormous fees owed as a result of adjusted gross revenue (AGR)

Back at the start of 2020, the major operators in India found themselves with found themselves faced with the unenviable task of paying billions of dollars to the Department of Telecommunications (DoT) regarding AGR fees. Reliance Jio, who faced the smallest sum, quickly paid off its dues, leaving rivals Bharti Airtel and Vodafone challenging the courts over how much and when they would be required to pay.
Now, not for the first time, India’s Supreme Court has rejected pleas from the operators to recalculate the amount owed to the government.
The story of AGR goes back to the liberalisation of the Indian telecoms sector back in 1994. Back then, the fixed annual licence fees operators were required to pay were very high, leading many service providers to default on these payments. As a result, in1999 the government introduced the National Telecom Policy, which would give the telcos an option to pay a revenue sharing fee instead of the fixed payments. This was set at 15% of AGR, which was later reduced to 13% and then 8% over subsequent years. 
But by 2020, disputes over exactly how AGR was defined left the operators battling the DoT over payments. The DoT now claim that the operators owe billions of dollars in government dues, while the operators themselves say the true sum is considerably lower.
The operators took the matter to the Supreme Court last year, presenting their own calculations as to how much they owed, as well as arguing that they should be able to pay the dues over a 20-year period. These requests were refused in July last year, with the Court ordering the fees to be paid as calculated by the DoT, but giving the operators 10 years to make these payments. 
But Vodafone Idea and Bharti Airtel, who were mandated to pay $6.74 billion, while Airtel owes $3.48 billion, respectively, did not give up their legal fight and have approached the Court again this year. 
It is this second case that the Supreme Court has dismissed today. 
Naturally, this is not good news for either operator, but for Vodafone Idea (recently rebranded as Vi) it could be catastrophic. The company’s net debt is around ten-fold its operating profit for the year to Match 31, according to calculations by brokerage Yes Securities.
In an effort to raise enough money to pay the instalment due at the end of the year, Vi previously attempted to raise $2 billion in investments from an Oak Hill-led consortium, but this has since fallen apart. Now, the company is reportedly be in talks with US private equity group Apollo Global Management, aiming to raise $3 billion over the next three months through a mixture of debt and equity. Vi may even offer Apollo a ‘sizeable stake’ in the business.
For Airtel, the situation is less dire, with the company not only competing more effectively in the Indian market but also when it comes to fund raising.
The relative security of Airtel and Vi’s position can be clearly seen from the reaction on the stock market to the Supreme Court’s decision today: Airtel shares fell 2.6% before climbing again, while Vi’s shares plunged 14.6%.
This is surely not the last time the operators will attempt to fight the AGR rulings in court, but with over a year of battling and no success, their prospects look bleak.
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