Supreme Court Rejects Vodafone Idea’s Plea for AGR Dues Waiver; Stock Plunges Nearly 9%

Supreme Court Rejects Vodafone Idea’s Plea for AGR Dues Waiver; Stock Plunges Nearly 9%

In a significant setback for India’s telecom sector, the Supreme Court on May 19 dismissed the petitions filed by telecom giants Vodafone Idea, Bharti Airtel, and Tata Teleservices seeking relief from their adjusted gross revenue (AGR) dues. The apex court termed the pleas as "misconceived" and emphasized that it was inappropriate for multinational companies to seek such relief.

A bench comprising Justices J B Pardiwala and R Mahadevan delivered a sharp rebuke during the hearing, stating, "We are really shocked by these petitions which have come before us. It is not expected of a multinational company. We will dismiss it." Senior advocate Mukul Rohatgi appeared on behalf of Vodafone Idea.

Market Reaction

Following the court’s decision, Vodafone Idea's shares tumbled sharply on the Bombay Stock Exchange (BSE), closing 8.68% lower at ₹6.73 apiece. Indus Towers, a key telecom infrastructure player, also saw its shares dip by 2.87%, ending the day at ₹388.60 per share.

Vodafone Idea’s Plea and Current Financial Burden

Vodafone Idea had sought a waiver of ₹45,457 crore in AGR-related dues, requesting that the government not insist on payments involving interest, penalties, and interest on penalties. The company argued that it plays a critical role in India's telecom landscape, holding approximately 18% market share in mobile services and supporting over 20,000 employees.

The telecom operator also highlighted that even after the conversion of dues into equity, it still owes the government approximately ₹1.19 lakh crore in spectrum-related dues, in addition to the AGR liability.

Airtel's Equitable Relief Request

Bharti Airtel, along with its subsidiary Bharti Hexacom, had also sought waiver of dues amounting to ₹34,745 crore, specifically targeting interest and penalties. Their plea was grounded in the request for an "equitable" resolution to the AGR liabilities.

Legal Background

The Supreme Court had previously ruled in 2020 that telecom companies must clear a total of ₹93,520 crore in AGR-related dues over a 10-year period. Subsequent attempts by the telecom players to seek rectification or reconsideration of alleged calculation errors were also rejected in a 2021 judgment.

Despite the government's intent to support the struggling telecom sector, the Supreme Court has made it clear that it will not interfere in the matter or grant blanket waivers. The recent ruling underscores the judiciary’s firm stance on maintaining regulatory and contractual integrity in the industry.

Key Takeaway:
With the Supreme Court's rejection of relief pleas, telecom companies like Vodafone Idea and Airtel will need to stay focused on operational efficiency, fundraising, and strategic partnerships to manage their financial obligations and remain competitive in a tough market.