Tata Communications disputed an application by the Telecommunications Department (DoT), to pay dues of Rs 1199.7 crore because the Company’s international and national (ILD & NLD) broadcasting licenses are not subject to the AGR judgment. The company also paid Rs 379.5 crore to DoT during the quarter ended March under protest.
In September 2019, the DoT had demanded Rs 6,633.4 crore from Tata Communications in accordance with the Supreme Court ruling on telecom companies’ AGR dues. The Company demand had included an amount of Rs 5,43,370 lakhs, that were refused by the DoT to cover the Company’s costs adjusted to its Gross Revenues, claimed on an accrual basis instead of payment basis for which a revised statement was submitted to the DoT on the basis of real payment.
“Although the company believes it needs to defend itself, it has made provision for Rs 33,717 lakhs in the quarter ended March 31, 2020, and for the balance of Rs 5,09,653 lakhs, the company considers it to be remote as the payment deductions were not considered by us. Tata Communications paid Rs 379.5 crore in protest against DT in the just-concluded quarter”, said Satish Reddy, Managing Director of DoT.
The amendment conforms to the National Telecommunications Sector Safety Directive that obliges all providers of telecom services, to install equipment from only government-approved vendors and sources. The authority designated shall notify equipment categories for which the Trusted Sources Security applies. The designated authority shall notify trusted sources together with the related telecommunication equipment for these categories of equipment.
The company also recorded a profit of Rs 67.38 crore by selling the building land and acknowledging the costs for the demerger of surplus land by 5.92 crores. The future profitability of TCPSL depends on the revised business model and the growth in the IBR, that is subject to regulatory clearance. In the period January-March, in profit of Rs 299 crore, Tata Communications clocked a 3.2 percent marginal decline from the preceding quarter’s profit, of Rs 309 crore, according to the financial statement. In the corresponding period last year, it lost Rs 275 crore.
The data revenue decreased by 2.2 percent per year at Rs 3,515 crore. This decrease comes mainly from a longer conversion and implementation cycle because of COVID-19 and moderation of UCC traffic, Rs 4,073 crore was consolidated sales, down 7.4 percent on a year. This was mainly due to the decline in the spoken and data businesses.
“Companies providing Satellite Connectivity Services in India, according to the new regulations issued by the Telecom Department will need to install Network Equipment as the government recommends (DoT). Similar restrictions on both telecommunications and internet operators had already been announced last month by DoT. The licensee shall herewith amend the provision and operation, by a sui-generis license agreement, of satellite-based services using a gateway installed in India. DoT stated in the amendment to the Telecom Equipment License Agreement. By the new standards with effect from 15 June, those operating satellites shall receive authorization from NCSC, using telecommunications equipment not designed as trusted products, to upgrade existing networks”, added Satish Reddy.
