Editorial – April 2021

Who will pay the Videocon AGR dues amounting to Rs 1,376 cr is becoming a legal slugfest between DoT and Bharti Airtel.

DoT’s affidavit in the Supreme Court, which details statutory dues paid by telecom operators on account of AGR, states that the AGR dues of Rs 1,376 crore of Videocon Telecoms Ltd (VTL), has not been paid by Bharti Airtel Ltd (BAL). VTL spectrum had been acquired by BAL in May 2016. VTL is under insolvency process. DoT has insisted that it is BAL that must clear the AGR dues because they took the entire spectrum of VTL. Once the entire spectrum is sold, nothing is left with the old licensee (VTL) and therefore the liability to clear these dues are of BAL, is the DoT stand.

Bharti Airtel has fought back against the demand and said that DoT’s demand has no basis in law and Airtel cannot be held liable for Videocon’s past dues. BAL says, the liability to clear these dues are with VTL.

Just what did Bharti Airtel pay for acquiring VTL spectrum and what did Videocon do with this money. Our investigations reveal that VTL had made a massive gain of Rs 2,792 crore on account of spectrum trading. After the Supreme Court cancelled 122 licenses on February 2, 2012, (2G Scam), which included 21 (All India, except Punjab) licenses of VTL, the company bought spectrum in six circles in the November 2012 auction at a total price of Rs 2,221 crore. In 2016, when the written down value in the books of accounts of its spectrum hit Rs 1,861 crore after usage for less than three years, VTL sold it to BAL for Rs 4,428 crore, thus giving VTL made a net gain of Rs 2,792 crore on account of spectrum trading. What did VTL do with money, it owed the banks huge amounts. At that time, as on March 31, 2016, VTL’s balance sheet showed a loan of Rs 3,361 crore. At the end of March 31, 2017, the loan was Rs 2,580 crore.

Instead of repaying loan money to the bankers, it gave Rs 1,845 crore as loan to its ultimate holding company Videocon Industries Ltd (VIL). Further, it converted a loan of Rs 1,219 crore given to one its subsidiaries, Quadrant Televentures Ltd (QTL) into unsecured zero coupon compulsory convertible debentures worth Rs 1,200 cr. This at a time when it was being chased by SBI and other banks for overdue payments and has finally landed in the bankruptcy process. Since diversion and defaults went hand in hand, VTL’s diversion of money should be a subject matter of CBI investigation. Read our cover story for all the relevant facts on where the AGR recovery process is headed for.