This will be a high impact case. If the ruling is in favour of the telcos, then it can reduce their liability by more than 60% of the Rs 25,000 crore amount being demanded by the telecom department. Airtel and Vodafone Idea, like in the adjusted gross revenue (AGR) will again be the most impacted by the ruling in the OTSC case.
The OTSC dues are based on DoT rules that require a telco holding beyond 6.2 MHz/circle between July 2008 and December 31, 2012, to pay a one-time market-linked price for the excess spectrum held. Likewise, the telcos are required to pay the market price for airwave holdings beyond 4.4 MHz/circle between January 2013 till the expiry of their respective licences.
Airtel two quarters ago had made provisions of Rs 7,004 crore in its exceptional item, mostly on account of OTSC dues.
Vi had recognised Rs 3890 crore in its exceptional items in the March end quarter towards providing for OTSC dues.
The tussle started with the government’s decision to charge telecom operators OTSC in the wake of the Supreme Court cancelling 122 telecom permits in 2012, under the alleged 2G scan which declared airwaves as public goods which were 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 UPA II government then changed the policy and announced that all airwaves allocated beyond 4.4 Mhz will be charged for at a market rate.
But the telcos protested this move on retrospective dues. The matter went to Telecom Disputes Appellate Tribunal (TDSAT) which ruled in July 2019 that the OTSC could be levied prospectively, not retrospectively.
TDSAT had observed that demand for such dues needed to come with the option of surrendering spectrum. So while the demand notice of 2012, came in with dues retrospect from 2008, the option of surrendering airwaves was given only from 2012 onwards and not from 2008.
The DoT then moved SC and the highest court refused to stay TDSAT order.