Adjusted Gross Revenue (AGR)

Why in News:

The Supreme Court will hear Vodafone Idea’s plea on September 26 against DoT’s fresh ₹9,450-crore AGR demand, of which ₹5,606 crore allegedly overlaps settled dues. The Centre, now holding 48.99% equity in VIL, signalled willingness to explore a negotiated solution beyond litigation.

Description:

• Definition: AGR is the measure of revenue earned by India’s telecom operators from their licensed telecom services.
• Purpose: Used to calculate
  • License Fee (LF)
  • Spectrum Usage Charges (SUC) payable to the Government.

Components of AGR

• Originally (Pre-2019): Included core revenue (telecom services) + non-core revenue (interest income, sale of assets, dividend, etc.).
• 2019 Supreme Court Judgement: AGR = Core Revenue + Non-Core Revenue → Heavier dues burden on telecom operators.
• Telecom Relief Package, 2021:
  • AGR redefined to exclude non-core revenue.
  • Only core revenue considered for future LF and SUC.

Telecom Relief Package, 2021 – Key Features

1. 4-year moratorium on AGR dues (from 2021 to 2025).
2. Option to convert deferred interest dues into equity.
3. Definition of AGR: Non-telecom revenue excluded.
4. Spectrum charges rationalised:
   1. Annual compounding of interest (instead of monthly).
   1. Interest rate = MCLR + 2%.
5. 100% FDI in the telecom sector via automatic route.

Conversion of AGR Dues into Equity

• Example: In 2023, Govt. converted ₹16,133 crore Vodafone Idea dues into equity.
• Current Context (2025): Bharti Airtel requests similar conversion.
• Post-2025: Moratorium expires → Operators must start yearly AGR payments.

Benefits of Conversion of AGR into Equity

• For Telecom Operators:
  • Relief from annual installments of past dues.
  • Reduced cash outgo → better financial stability.
• For Government:
  • Stakeholding in telecom firms.
  • Potential to sell shares at a premium in future.

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