Vodafone Idea Gets Relief as Supreme Court Allows Centre to Reassess Additional AGR Dues

Following the Supreme Court’s decision to permit the Central government to re-examine the matter of reevaluating the telecom operator’s adjusted gross revenue (AGR) obligations, Vodafone Idea’s stock price surged by more than 9% on Monday. Following the SC’s decision, Vodafone Idea’s stock increased 9.45% to INR 10.53 per share on the BSE. The Supreme Court noted that the question is within the Union government’s policy purview and that it does not perceive any obstacle to the Centre re-examining the issue and reaching a suitable conclusion.

What SC said in Vodafone’s Case?

The Supreme Court said that there was no reason to stop the Centre from re-examining the matter, which was a huge relief to the financially troubled telecom operator. The court on 27 October gave the government permission to reevaluate the demand for AGR dues and to resolve the telecom operator’s complaints without involving the courts.

Solicitor General Tushar Mehta, speaking on behalf of the Union government, requested more time, and the hearing was postponed. B.R. Gavai, the Chief Justice of India, rescheduled the hearing for the fourth time and instructed Mehta to take a firm stance on the issue. Chief Justice B.R. Gavai and Justice K. Vinod Chandran made the observation that the government’s policy discretion would control any decision pertaining to relief for the telecom operator.

What is AGR and Why Vodafone Challenged DoT’s Demand?

The Supreme Court postponed hearing Vodafone Idea’s petition in the AGR dues matter until October 27 on October 13. The indebted telecom company has contested the Department of Telecommunications’ (DoT) demand, aiming to settle further AGR claims totalling INR 5,606 crore for the years up to FY2016–17.

The revenue amount known as AGR is used to determine the spectrum charges and licensing fees that telecom businesses are required to pay to the government. At the request of the telecom company and Solicitor General Tushar Mehta, who was representing the Centre, the top court had previously postponed the hearing on the plea multiple times. The federal government had previously stated that it was working with the corporation to find a solution. According to Mehta, the government had a direct stake in Vodafone Idea’s existence because it owned over 50% of the company.

Vodafone Idea has requested that the DoT, in accordance with the “Deduction Verification Guidelines” of February 3, 2020, thoroughly reevaluate and reconcile all AGR dues for the period up to FY 2016–17. The supreme court denied telecom companies’ requests to correct alleged flaws in the computation of AGR dues owed by them earlier this year, refusing to reconsider its 2021 judgement.

The Supreme Court ordered telecom service providers to pay INR 93,520 crore in AGR-related debts within ten years in September 2020. 10% of the total dues, as determined by the DoT, must be paid by March 31, 2021, according to the directive. The rest amount must be paid in yearly instalments between April 1, 2021, and March 31, 2031.