Adjusted Gross Revenue (AGR)
Context:
The government has agreed to reconsider its demand for additional AGR dues from Vodafone-Idea (VI), citing a huge change in circumstances as the government now holds 49% equity in the company.
Definition of Adjusted Gross Revenue (AGR)
AGR is a fee-sharing mechanism between government and the telcos (telecom operators) who shifted to 'revenue-sharing fee' model in 1999, from the 'fixed license fee' model. In this course, telcos are supposed to share a percentage of AGR with the government.
This revenue is used to determine the license fees and spectrum charges owed to the government.
The Department of Telecommunications (DoT) calculates AGR as the total revenue generated by operators (This includes income from both telecom and non-telecom sources such as interest earnings and asset sales).
The AGR Dispute Case
The dispute between the telcos and the government has been mainly on the definition of AGR. While the government says that AGR includes all revenues from both telecom as well as non-telecom services, the operators suggest that it should include only the revenue from core services.
On October 24, 2019, the top court widened the definition of AGR to include the government's view.
Supreme Court Verdict (2019):
In October 2019, the Supreme Court delivered a landmark judgment upholding the DoT's broader definition of AGR.
It ruled that all revenues (including non-telecom income) must be included in the AGR calculation.
The verdict impacted over 2,000 entities, including non-telecom firms like public sector units and internet service providers (ISPs) that held telecom licenses.
Repayment Timeline:
In September 2020, the Supreme Court granted telecom operators a 10-year timeline (until 2031) to clear their AGR liabilities.