Supreme Court Rejects Vodafone Idea’s Plea, Shares Plunge Amid AGR Dues Crisis

On September 19, the Supreme Court of India dismissed curative petitions filed by major telecom companies, including Vodafone Idea and Bharti Airtel, in a significant decision regarding adjusted gross revenue (AGR) dues. The telcos had sought recalculations of their dues, claiming errors in the Department of Telecommunications' assessment. However, the court ruled that there was no merit in the petitions, marking a major setback for the telecom sector, especially for Vodafone Idea.

Vodafone Idea, already burdened by massive debt, witnessed its stock plunge by 20%, reaching ₹10.38 on the National Stock Exchange by the end of the day. This marked the company’s worst stock fall since January 2022. The negative impact extended to Indus Towers as well, whose shares dropped by nearly 9%, while Bharti Airtel managed to close 0.60% higher, indicating more stability in comparison.

The curative petition, which is considered the last legal remedy available in the Indian judiciary, was dismissed by a bench led by Chief Justice of India DY Chandrachud. The court reaffirmed that there was no valid case for recalculating the dues within the parameters already laid out in earlier judgments. As a result, Vodafone Idea faces increasing pressure as its AGR liabilities, which amounted to ₹70,320 crore by the end of the financial year 2024, continue to loom large.

The rejection of this plea spells more trouble for Vodafone Idea, which has been struggling to raise capital to meet its debt obligations. Analysts predict that the company’s financial position could become more precarious without relief, and the absence of any correction in the AGR calculations leaves Vodafone Idea on shaky ground. This may even threaten the company’s survival in an already competitive telecom market.

Vodafone Idea had argued that the errors in the computation of its AGR dues were substantial, and the interest and penalties imposed further escalated its financial strain. The company hoped that a recalculation could reduce its liabilities, but the court’s refusal to allow even clerical or arithmetical corrections has now closed off that possibility.

In contrast, Bharti Airtel, which was also a petitioner, seems to have escaped the brunt of the decision. Market experts suggest that the dismissal of the curative petition could turn out to be beneficial for Bharti Airtel, as Vodafone Idea's troubles might lead to a redistribution of market share. Bharti Airtel, which has remained in a stronger financial position, may capitalize on Vodafone Idea's challenges to expand its foothold in the telecom industry.

The AGR saga dates back to a 2019 Supreme Court ruling, where telecom operators were directed to pay hefty dues based on a wider interpretation of AGR that included non-core revenue streams. Following the 2019 judgment, companies were given a 10-year period to clear their dues, but many, including Vodafone Idea, have struggled to cope with the financial burden.

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With this latest decision, Vodafone Idea’s hope for a significant reduction in its dues has been dashed. The company’s ability to raise debt or equity capital may now face increased skepticism from investors and lenders, leaving its future uncertain.