Adjusted Gross Revenue (AGR)

Prelims Bits – Economy

Context: The Supreme Court has dismissed the review petitions filed by Vodafone Idea and Bharti Airtel, which sought corrections in the calculation of their Adjusted Gross Revenue (AGR) dues.

Understanding Adjusted Gross Revenue (AGR)

AGR is a crucial financial metric used to determine the revenue share that telecom companies must pay to the government as part of their spectrum usage charges and licensing fees. Under this framework, telecom operators are obligated to share a percentage of their AGR with the Department of Telecommunications (DoT).

AGR Calculation & Dispute

• The DoT’s Interpretation: The Department of Telecommunications defines AGR as encompassing all revenue sources of a telecom company, including earnings from non-core activities such as interest on deposits and asset sales.
• Telecom Companies’ Standpoint: Operators argue that AGR calculations should be limited to revenue generated exclusively from telecom services, excluding non-telecom income.
• Supreme Court Ruling (2019): In October 2019, the Supreme Court upheld the government’s broader definition of AGR, mandating the inclusion of all revenue streams, except for termination fees and roaming charges.

The recent court ruling reaffirms the government’s stance, reinforcing telecom operators’ obligations to pay AGR dues based on the comprehensive revenue model.