MUMBAI: The Supreme Court on Tuesday adjourned hearing the one-time spectrum case till November 17, after the Department of Telecommunications (DoT) asked for three weeks’ time to reconsider continuing with its appeal against a telecom tribunal decision. The government’s move boosted the shares of Bharti Airtel and Vodafone Idea, the two telcos most affected by the case.
In July, 2019, the telecom tribunal had ruled that the OTSC could be levied prospectively, not retrospectively, on telcos. The DoT, which wanted to levy the charges retrospectively as well, appealed the order in the top court.
“The central government is desirous of reviewing and or reconsidering his decision to proceed with the present proceedings of appeal. It is submitted that considering the nature of the issues involved, this decision will have to be taken after the scrutiny at various levels which may consume some reasonable time,” DoT said in its affidavit to the SC on Tuesday.
In midday trade, the Vodafone Idea stock was up 4.1% at Rs11.90 while the shares of Bharti Airtel rose 2.1% to Rs695.15 on the BSE.
The one time spectrum charge (OTSC) is one of the large battles between the telcos and the DoT which began almost a decade ago. It reached a flashpoint in 2019 when an Telecom Disputes Appellate Tribunal (TDSAT) ruled in July 2019 that the charges could be levied prospectively, not retrospectively.
” The amount involved, which is a subject matter of adjudication, would be the imposition of financial liability on various Telecom Service Providers, to the tune of Rs 40,000 crore,” said DoT. According to the affidavit seen by ET, the government took cognizance that telcos have been making losses and even the banks have appealed for help.
It informed the top court that the Indian Bank Association had conveyed to the government in writing that adverse developments in the telecommunication sector may lead to “failures, vanishing competition to operate unsustainable operations and severe loss for the banking system, which has a huge exposure to this sector”.
“In view of the above referred circumstances the appellant prays for three weeks time, so as to enable the central government to take an informed decision whether to proceed with the present appeal or not,” said the DoT.
While adjourning the case, the two-judge bench led by Justice MR Shah, asked what will be the “consequences” of such a review by the government because it will have to “consider the larger public interest”.
“You have to satisfy the bench. We are very clear in our mind,” said the bench to the Solicitor General Tushar Mehta.
The government’s decision comes on the back of recent Cabinet call to provide a moratorium for spectrum and adjusted gross revenue dues for telcos, scrap spectrum usage charge from the next auctions, reduce bank guarantees and other provisions to ease “financial stress” of the telecom sector.
DoT has pegged Airtel’s OTSC dues at Rs 8,414 crore. Bharti Airtel recorded Rs 1,807.5 crore charge towards OTSC in 2019-20, with the balance Rs 6,606.5 crore as contingent liability. Vodafone Idea has said OTSC accruals till March-end, 2021, was Rs 4,389.8 crore, and it has provided for it in its financials
The government said the decisions to review its appeal in the OTSC case were taken keeping in mind the latest Cabinet decision to” promote public interest, protecting government revenue and more particularly encouraging competition amongst telecom service providers, by preventing a situation where viability of some tsps becomes unsustainable, resulting in a monopolistic situation and other adverse impact on the economy”.
The OTSC tussle began after the Supreme Court cancelled 122 telecom permits in 2012 in connection with the 2G scam, declaring airwaves as public goods best utilised through an auction.
The Cabinet had then decided to levy an OTSC on telcos that were allocated spectrum along with pan-India licences at Rs 1,658 crore. Under the subscriber-linked criteria followed previously, telcos were given additional tranches of spectrum after they reached a certain subscriber base in a circle.
However, the Congress-led UPA II government then changed the policy and announced that all airwaves allocated beyond 4.4 Mhz would be charged for at a market rate.
The telcos protested this move on retrospective dues. The issue reached the TDSAT, which ruled in July 2019 that the charges could be levied prospectively, not retrospectively.
The tribunal then observed that demand for such dues needed to come with the option of surrendering spectrum. So, while the demand notice of 2012 sought dues from 2008, the option of surrendering airwaves was given only from 2012 onwards.
The DoT then appealed the TDSAT ruling in the top court.