DoT faces uphill task of recovering telcos’ dues

The Supreme Court this week had expressed concerns over the recovery of dues to the government by bankrupt telcos, and asked the Centre to formulate plans to recover them. However, the classification of the government as an operational creditor in bankruptcy proceedings could make the recovery of these dues, including adjusted gross revenue (AGR), difficult.

Reliance Communications Ltd (RCom) owes ₹25,199 crore in spectrum usage charges and licence fee dues to the department of telecommunications, shows government estimates. This is nearly half of the dues of ₹49,054 crore calculated under the company’s insolvency proceedings, while Aircel owes ₹12,389 crore.

Under the Insolvency and Bankruptcy Code (IBC), financial creditors typically have greater right on the recovery proceeds and DoT does not fall under the definition of a financial creditor. This means that it may be able recover a fraction from the processes.