Published on: January 12, 2022

BAILOUT OF VODAFONE IDEA

BAILOUT OF VODAFONE IDEA

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buy modafinil online in uk Vodafone Idea has opted to convert its adjusted gross revenue dues into equity, resulting in the government owning 35.8 per cent of the total outstanding shares of the company.

What is Adjusted Gross Revenue

  • Usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
  • Divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent respectively.
  • How is it calculated : 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.

Issues associated

  • The telecom sector was liberalised 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.
  • Under this, mobile telephone operators were required to share a percentage of their AGR with the government as annual license fee (LF) and spectrum usage charges (SUC). License agreements between the Department of Telecommunications (DoT) and the telecom companies define the gross revenues of the latter.
  • The dispute between DoT and the mobile operators was mainly on the definition of AGR.
  • 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 sale of any investment or fixed assets.