Shares of Vodafone Idea (Vi) are drawing close attention from investors as the Supreme Court of India prepares to hear a significant plea from the telecom operator. The case revolves around the company’s long-standing Adjusted Gross Revenue (AGR) dues, with Vodafone Idea claiming that there are errors in the Department of Telecommunications’ (DoT) calculations amounting to roughly ₹9,450 crore. The outcome of this hearing could be crucial to the company’s efforts toward financial recovery.
Key Takeaways
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The Supreme Court is set to hear Vodafone Idea’s plea regarding its AGR dues.
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The company alleges calculation mistakes in the DoT’s assessment, overstating its liability by about ₹9,450 crore.
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This development follows Vodafone Idea’s successful ₹18,000 crore Follow-on Public Offer (FPO).
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A favorable judgment could bring significant financial relief to the debt-laden telecom operator.
Vodafone Idea’s petition urges the Supreme Court to direct the DoT to correct what it describes as clear errors in the AGR demand. According to the company, the government’s calculations did not properly account for certain payments that have already been made and even included some revenues twice. This plea forms part of the operator’s broader strategy to reduce its debt burden and stabilize financially. A correction in the dues, the company argues, would present a more accurate picture of what it truly owes the government.
The AGR issue itself traces back to a 2019 Supreme Court verdict that upheld the DoT’s broader definition of AGR, which includes revenue from non-telecom sources as well. That decision placed a heavy financial load on older telecom players such as Vodafone Idea and Bharti Airtel. Vodafone Idea alone was left facing dues of more than ₹58,000 crore. Although the government later rolled out a relief package that offered a payment moratorium and an option to convert interest dues into equity, the principal amount has continued to weigh heavily on the company’s balance sheet.
For Vodafone Idea, this legal battle is pivotal. The company recently managed to raise a substantial ₹18,000 crore through its FPO to strengthen its 4G network and push forward with its 5G rollout. A reduction of ₹9,450 crore in its AGR liability could free up valuable resources for network expansion and day-to-day operations. Perhaps more importantly, it could lift investor confidence, which has been somewhat restrained due to the firm’s debt levels and prior financial setbacks.
Frequently Asked Questions (FAQs)
Q. What is the AGR issue in Indian telecom?
A. Adjusted Gross Revenue (AGR) is a usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT). A 2019 Supreme Court ruling widened the definition of AGR to include revenue from non-core telecom operations, which resulted in massive dues for many telecom companies.
Q. What is Vodafone Idea’s total AGR debt?
A. As per government records, Vodafone Idea’s total AGR liability was pegged at over ₹58,000 crore. The company has paid a portion of this, but a large amount remains due.
Q. What will happen if the Supreme Court rules against Vodafone Idea?
A. If the court rejects the plea, Vodafone Idea will have to pay the disputed amount as per the DoT’s original calculation. This would maintain the existing financial pressure on the company.
Q. Why is this Supreme Court hearing important for Vi?
A. The hearing is important because a favourable verdict would reduce the company’s total debt by nearly ₹9,450 crore. This would provide significant financial relief and allow the company to invest more in its network to better compete with rivals.
Q. Has Vodafone Idea paid any AGR dues yet?
A. Yes, Vodafone Idea has made partial payments towards its total AGR dues over the past few years. The current legal case is about correcting the total amount that the company believes it owes.
