SC order on AGR will adversely impact Digital India roll-out: COAI

Telecom TowerRajan S Mathews, director general, COAI, said the Supreme Court’s judgment on AGR matter is a major setback for the telecom industry in India, which is already under severe financial distress.

According to Mathews, the Supreme Court’s judgment on the definition of Adjusted Gross Revenue (AGR) will have an impact of over INR 92000 crore on the industry.

“With over 1.19 billion subscribers, the telecom sector is a key contributor to the Indian economy in terms of consumer benefit, employment, revenue generation and contributes 6.5 percent to the GDP. The sector has the lowest tariffs in the world backed by the investment of over INR 10 lakh crores in setting up world class mobile networks over the last 20 years but is going through one of its most disruptive phases.”

“The sector is already reeling under a daunting debt of approx. INR 4 Lakh crores and is in dire financial straits as operators are making negative returns on their investments. The telecom EBITDA continues to contract, while the interest expense of the Industry continues to increase,” Mathews said.

The taxes and levies in the Indian telecom sector, ranging from 29% to 32%, are one of the highest globally, he added.

“The Supreme Court’s judgment is the last straw in contributing to financial distress and it remains to be seen whether the industry will be able to recover from this setback. The immense financial pressure on the sector will also adversely impact Digital India roll out,” Mathews further said.