Supreme Court dismisses Vodafone Idea's AGR relief plea; shares nosedive

The Supreme Court on Monday (May 19) dismissed Vodafone Idea's plea seeking relief on adjusted gross revenue (AGR). The apex court has also turned down pleas from other major telecom players like Airtel and Hexacom, Zee Business reported.

The ruling came as the government earlier rejected debt-ridden Vodafone Idea Ltd's plea for fresh relief on its AGR dues.

The Department of Telecommunications (DoT), in a letter dated April 29, said the request for further concessions on AGR liabilities "cannot be considered" due to the Supreme Court's verdict announced in the case in 2020. The apex court ruling fixed a 10-year timeline for the telecom companies to clear dues.

Supreme Court reponse

The apex court has dismissed telcom companies’ AGR relief pleas, calls them “misconceived”. According to the court, the issue is the executive’s domain, refusing to intervene.

The top court has also suggested that telecom operators can explore other legal remedies but not through it.

The court clearly told Vodafone "not to make us a party". Meanwhile, Vodafone argues it paid Rs 50,000 crore, and the government holds close to 50 per cent stake. On this, the top court said that the government is free to help and the judiciary won’t compel it.

Vodafone Idea had sought a waiver of over Rs 45,000 crore in AGR-related liabilities to ensure its survival.

Bharti Airtel, along with its unit Bharti Hexacom, requested a waiver of Rs 34,745 crore in dues related to interest and penalties.

Meanwhile, DoT pointed out that Vodafone Idea has already sought and received partial support when the government converted spectrum-related dues worth Rs 36,950 crore into equity, increasing its stake in the company to 49 per cent.

The government had earlier requested the court to extend the repayment window to 20 years, but the plea was turned down.

Vodafone Idea AGR Dues | What is the matter?

Vodafone Idea has been fighting a losing court battle over the definition and calculation of AGR, which began with a 2019 ruling. Telecom companies challenged the calculations, citing arithmetic errors, but the Supreme Court rejected the claims. Vodafone Idea filed a curative petition in July 2024, which was also turned down in September 2024.

Vodafone Idea, a joint venture between UK-based Vodafone Group Plc and India's Aditya Birla Group, has been under financial pressure since a 2019 Supreme Court verdict broadened the scope of adjusted gross revenue (AGR), significantly increasing telecom companies' liabilities.

Although the government converted a portion of the company's dues into equity, acquiring a 49 per cent stake, Vodafone Idea continues to struggle financially because of the crushing debt burden.

Meanwhile, on May 15, Vodafone Idea launched its high-speed 5G services in Delhi NCR. The 5G rollout in the capital region follows a similar expansion in Mumbai, Chandigarh, and Patna as part of the company's initial phase of the rollout.

Vodafone Idea said it is all set to roll out 5G in all 17 priority circles, where it has acquired 5G spectrum, by August this year.

What will be the impact after rejection

• If no relief is given, Vodafone Idea's operations will be in danger.
• Bharti Airtel's network rollout will also be affected.
• Survival will be difficult for the entire sector.
• The decision will affect the financial structuring of the sector and DoT's recovery strategy.

Meanwhile, shares of Vodafone Idea were 8 per cent down at Rs 6.79 each on BSE today, May 19.

With inputs from agencies