Airtel and Voda-Idea could pay DoT, but what about ₹38,000 crore from defunct telcos?

• The 14 year old battle on defining ADR will cost Airtel and Vodafone-Idea over ₹50,000 crore in penalties and interests.
• The order also technically affects 13 other telecom companies which have ceased to exist.
• While a few filed for bankruptcy, others have simply shut down operations.

It is not just Bharti Airtel and Vodafone-Idea that are affected by the Supreme Court order which went in favour of the telecom department. Ideally, other than these two companies – which were three earlier–there were 13 others who could have been affected by the order, if they did survive. Fortunately for them and unfortunately for DoT – they did not.

As much as ₹38,000 crore that the telecom department is owed can never be recovered, according to a report by Spark Capital. “Recovery is unlikely from bankrupt companies given banks are already taking a haircut on such telcos,” Nitin Soni, director of corporate at Fitch Ratings told Business Insider India.

One of such is Reliance Communications which is now undergoing bankruptcy proceedings. It is the only telecom company for whom the change in definition of Adjusted Gross Revenue (ADR) is known along with penalties---at over ₹16,000 crores. However, since this order came much after it went into bankruptcy, there is no way could recover it.

Aircel has been fighting a losing battle with its own debt and inability to keep up its operations. Just last year, the company became defunct and filed for bankruptcy. But the company was once the market leader in Tamil Nadu and also expanded to 6 other circles. But it was hit by a controversy over its takeover by Malaysian company Maxis Communications and was heavily investigated by the CBI. By 2012, it had started scaling down its operations owing to excessive competition among other hurdles. It had tried to merge itself with many operators including Sistema, Airtel and RCom but those deals never took off.

The next in line is BPL Communications which unlike other telecom companies, died a natural death. Its held licence only for the Mumbai circle which expired in 2014. While it did consider re-applying for it and also merging itself with Airtel, that was not to be. It simply stalled operations and allowed its users to port out. DoT is getting nothing from it, as no traces of this company exists now.

There are many others which have been protesting against DoT’s move to charge ADR on all the revenues of a telecom company instead of those which centric to telecom operations. Some of them are listed entities like Tata Teleservices Maharashtra, and others like Tata Teleservices which also includes Tata Docomo and Tata Indicom. But these companies have since merged with Airtel and the extent of their liability and ability to pay up is not known.