'PGCIL would not be liable to pay Rs 22,000 cr AGR payment'

"We don't believe the PGCIL would be liable to make these payments and hence do not factor these in our estimates. An unfavorable outcome therefore remains a negative risk," Bank of America Securities said in a report.

The report said the dues demanded by DoT are twice the firm's FY20E earnings, and the CPSE is awaiting clarity on payment.

On October 24, the Supreme Court asked companies to pay dues to the Department of Telecom as per the computation of AGR decided by the government. The telecom companies like Airtel, and Vodafone Idea has gone to the Court again through a modification petition which were also dismissed and now are paying gradually.

The demand notice also went to non-telecom companies like Oil India, which got a notice of Rs 48,489 crore, and the GNFC got a bill of Rs 15,000 crore. In provisional assessment orders, DoT has raised a demand on GAIL of Rs 1.83 lakh crore towards annual license fee including interest and penalty on AGR.

The DoT, through its provisional assessments for years FY15-18 and reassessment for FY 13/14, has demanded from the PGCIL Rs 22,000 crore of additional license fee, by adding non-telecom revenues in the PGCIL's AGR calculations.

The amount is 23 per cent of the PGCIL's market cap, and twice its FY20E earnings.

The PGCIL has previously said its stand is against payment of these dues. It had said: "Non-telecom income not a part of AGR for NLD/ISP licenses and the PGCIL holds National Long Distance (NLD) and Internet Service Provider (ISP) licenses and has regularly made applicable AGR based license fee payments to DoT."

It believes the definition of AGR under NLD & ISP license agreements does not include non-telecom revenue. Such revenue, which it views the DoT to have incorrectly included in its AGR calculations, are 98 per cent of its total sales.

Moreover, to strengthen its argument, the PGCIL has cited the example of DoT's recent assessment for FY19, where it excluded the PGCIL's non-telecom/miscellaneous income.

The PGCIL believes the current dispute is on interpretation of AGR of telcos, who hold Unified Access Service License (UASL) and who have migrated from National Telecom Policy (NTP) 1994 to NTP 1999. PGCIL was not a licensee prior to 2001 & has never held a UASL, BoA said.