Context:

The Supreme Court has allowed telecom companies 10 years’ time to pay their adjusted gross revenue (AGR) dues to the government.

About:

• Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
• It is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent respectively.
• As per DoT, the charges are calculated based on all revenues earned by a telco – including non-telecom-related sources such as deposit interests and asset sales.
• The telecom sector was liberalized under the National Telecom Policy, 1994 after which licenses were issued to companies in return for a fixed license fee.
• However, to provide relief from the steep fixed license fee, the government in 1999 gave an option to the licensees to migrate to the revenue sharing fee model.
• The DoT argued that AGR includes all revenues (before discounts) from both telecom and non-telecom services.
• The companies claimed that AGR should comprise just the revenue accrued from core services and not dividend, interest income, or profit on the sale of any investment or fixed assets.