AGR disagreement is over revenue-sharing between the federal government and telecom companiesAditya Birla group Chairman Kumar Mangalam Birla, who holds around 27 percent stake in Vodafone Idea, has actually expressed a desire to turn over his stake in the debt-laden Vodafone Idea (VIL) to the government or any other entity selected by the centre.
The telecom sector used to be a dynamic area just a few years ago, with the participation of a dozen gamers.
All the business have actually decreased under ever since, with the exception of Vodafone Idea, Bharti Airtel and Reliance Jio, due to a two-decade-old festering conflict over revenue-sharing between the government and telecom companies.The conflict centres on the definition of adjusted gross income (AGR).
Telecom business pay a portion of their earnings as license charges to the government.
According to them, non-core organizations such as rent, earnings from sale of handsets or roaming charges must not be included in the revenue of which they pay a portion - they just wished to pay on earnings earned from their core organization.
The government clearly believes otherwise.According to the Department of Telecom, Bharti Airtel owed more than Rs 43,000 crore as adjusted gross revenue (AGR) fees, while Vodafone Idea's balance payment exceeded Rs 50,000 crore.
The two companies had approached the Supreme Court for recomputing their AGR dues, however the top court dismissed the plea.Mr Birla has actually made it clear in his letter that foreign investors, primarily non-Chinese, are reluctant to make investments in Vodafone Idea for understandable factors.
Due to this, will the government enable Vodafone to shut down or will it opt for nationalization of the embittered company?Allowing Vodafone Concept to close down will leave the large telecom arena open for a two-horse race in between Reliance Jio and Bharti Airtel, with the Mukesh Ambani-owned entity calling all the shots.
The absence of competitors might show destructive to customer interests.
The data expenses have actually already started inching upwards in what was the world's most inexpensive information market in the not-too-distant past and might just get dearer in the future.Nationalization could be a choice, if only to conserve jobs.
The government has revealed its intent to take the private route and the procedure for the sale of Air India is currently underway.
Moreover, traditionally, governments have not done a good task at running companies in the past.