Home Economy Know how to calculate Adjusted Gross Revenue

Know how to calculate Adjusted Gross Revenue

As per the government definition, Adjusted Gross Revenue includes rental receipts, dividend income, and income from any other activity arising out of the company's telecom license.

New Delhi, April 16: Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT). It is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent, respectively.

How is Adjusted Gross Revenue calculated?

Image: Utkal Today

– The Adjusted Gross Revenue is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent, respectively.

As per the government definition, AGR includes rental receipts, dividend income, and income from any other activity arising out of the company’s telecom license.

– The telecom operators would make 10% of the total dues as demanded by the Department of Telecom by March 31, 2021.

– The yearly installments would commence from April 1, 2021, up to March 31, 2031. Firms would pay the installments by March 31 every year.

– In the event of any default in making annual installments, interest would be levied as per the agreement along with penalty and interest on penalty automatically without reference to the court.

Image: Triumph IAS

Current relevance of Adjusted Gross Revenue

The Supreme Court’s judgment in the Adjusted Gross Revenue issue originally wanted the telecom companies to make the three-month repayments. The court concluded that the private telecom sector had long reaped the fruits of the Centre’s liberalized payment mode by revenue sharing regime. Later, the government had proposed in court a 20-year “formula” for telcos to make staggered payments of the dues. Leading telecom companies reported record losses for the quarter ended September 2019 after making provisions toward the Supreme Court’s ruling on the definition of adjusted gross revenue (AGR), which they created after disregarding the TDSATs inferences. However, The government has also raised the issue of under-reporting of revenues to duck charges. The Comptroller and Auditor General of India (CAG) called out telcos for understating revenues to the tune of Rs 61,064.5 crore.

Following a massive outburst from the prominent players in the telecom sector, the Supreme Court court observed that 20 years fixed for payment is excessive and has allowed telecom companies ten years to pay their adjusted gross revenue (AGR) dues to the government. However, Even after part payment, the dues still run to ₹1.43 lakh crore.

The terms of this latest judgment in September 2020 are as under:

– The National Company Law Tribunal (NCLT) should decide whether or not telecom companies can sell spectrum under the Insolvency and Bankruptcy Code.

– Due to the current Covid-19situation, telcos should pay 10 percent of the total dues by March 31, 2021.

– Telecom companies would also have to make payments on or before February 7 every year. The non-payment of dues in any year would lead to the accrual of interest and invite contempt of court proceedings against such companies.

–      Telecom companies will have to pay up as much as Rs 92,642 crore to the government, more than half of which are owned by Airtel and Vodafone.

Also read: BharatNet Project and improvement of telecom services in rural India

Contextual background

– The government liberalized the telecom sector under the National Telecom Policy, 1994, after which it issued licenses to companies in return for a fixed license fee.

However, to provide relief from the steep fixed license fee, the government in 1999 gave the licensees an option to migrate to the revenue sharing fee model.

– Under this new model, 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 latter’s gross revenues.

– The revenue shared by telcos with the government goes into the consolidated fund of India. It was estimated, after the SC’s judgment, that the telecom operators owe the government about ₹92,000 crores in bank charges, interest, and penalties on license fees alone.

– 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 the sale of any investment or fixed assets.

Imae: YouTube

– In 2005, the Cellular Operators Association of India (COAI) challenged the government’s definition for AGR calculation.

– In 2015, the TDSAT (Telecom Disputes Settlement and Appellate Tribunal) stayed the case in favor of telecom companies and held that AGR includes all receipts except capital receipts and revenue from non-core sources such as rent, profit on the sale of fixed assets, dividend, interest and miscellaneous income.

– However, setting aside TDSAT’s order, Supreme Court, on October 24, 2019, upheld the definition of AGR as stipulated by the DoT.


The primary implication that will affect the consumers is that cheap data usage and free call services currently offered by many telecom players will soon become obsolete. If the firms are forced to pay such massive dues to the Central government, they will indeed have to change their scheme structures and data options that they currently provide to their customers.

To enhance the telecom sector’s growth, improve the quality of service, and generate resources for the telcos, a new infrastructural policy is the need of the hour.

– The government needs to provide an enabling environment for telecom operators. To achieve that, a long-term vision plan must be made accordingly.

–      Enhanced accessibility of broadband services will enable the digital empowerment of India. Hence adequate steps must be taken by the government to strengthen the overall telecom sector.

Shreya Bhattacharya


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