Hughes India, a subsidiary of US-based satellite broadband company Hughes Network Systems, said that it might have to shut down India operations, since it can not pay the Rs 600 crore it owes the government as part of adjusted gross revenue (AGR) dues, Reuters reported. We have reached out to Hughes India for comment.
The company reportedly wrote to Telecom Minister Ravi Shankar Prasad on February 20, saying that it was staring at bankruptcy, and that the Department of Telecommunications (DoT) had made an incorrect calculation of the dues more than a decade ago which has ballooned to $84 million (Rs 600 crore) with interest and penalties.
The letter reportedly said that the closure of Hughes India could potentially disrupt connectivity at more than 70,000 banking locations and many critical satellite networks in the Indian navy, army and railways, and added that it was an “SOS request”. Hughes India provides network services to defence, education, and banking sectors in the country, the report said. While Hughes India’s AGR dues are significantly smaller compared to those of Bharti Airtel and Vodafone Idea, it is reportedly thrice the company’s net worth in India.
SC’s AGR verdict: This development comes after the Supreme Court, in October 2019, had ordered telecom companies to include non-core income for calculation of Adjusted Gross Revenue (AGR), and asked them to pay Rs 92,640 crore to the Central government, which includes disputed demand, interest, and penalty.
- The Supreme Court has already dismissed a review petition filed by telecom companies challenging the October 2019 order, and hearing on a subsequent plea filed by them is currently underway, with the next date of hearing being March 17 (more on that below).
Airtel, Vodafone pay part of AGR dues: As per regulatory filings, Bharti Airtel, on February 17, paid the DoT Rs 10,000 crore towards AGR dues, which includes an undisclosed amount on behalf of Telenor India, and Rs 500 crores on behalf of Bharti Hexacom. Meanwhile, Vodafone Idea had paid the DoT Rs 2,500 crore on the same day, and another Rs 1,000 crore on February 20, according to The Hindu.
Supreme Court directed telcos to pay AGR dues by March 17: Both Airtel and Vodafone rushed to pay part of their AGR dues after the Supreme Court on February 14 rejected their plea seeking more time to settle AGR dues, and ordered telcos to pay their outstanding dues by March 17. In case telecom companies fail to pay AGR dues by then, the Managing Directors/ Directors of the companies will have to personally appear before the Court on the next day of hearing (March 17). It also asked MDs/Directors of the companies “to show cause why we [SC] should not initiate contempt proceedings against them”.
“This case projects a very disturbing scenario. The companies have violated the order passed by this Court in pith and substance. In spite of the dismissal of the Review application, they have not deposited any amount so far. It appears the way in which things are happening that they have scant respect to the directions issued by this court.” — Supreme Court on February 14
The court also issued a contempt notice against a desk officer at the DoT, who had allegedly issued a direction “not to insist for any payment pursuant to the order passed by this Court and not to take any coercive steps till further orders”.
**Update at 1:00 pm: The story was initially published with an incorrect quote, and has been updated with corrections. The previous version has been archived here.