Vodafone Idea Shares Dive 15 Per Cent After AGR Setback In Supreme Court

Voda-Idea share price: As a result, shares of Vodafone Idea, which has been struggling with heavy debt, saw a dramatic decline of over 15 per cent

Voda-Idea share price: Telecom stocks experienced significant selling pressure on Thursday following a Supreme Court (SC) ruling that dismissed pleas from major telecommunication companies for a re-computation of adjusted gross revenue (AGR) dues. The SC's decision rejected curative petitions filed by leading telecom operators Bharti Airtel and Vodafone Idea, who claimed errors in the calculation of their AGR liabilities.

As a result, shares of Vodafone Idea, which has been struggling with heavy debt, saw a dramatic decline of over 15 per cent. By 1.35 PM, Vodafone Idea's shares were trading at Rs 11.00 apiece, down 14.73 per cent on the NSE. On the BSE, the stocks were trading at Rs 11.00 per share, declining 14.79 per cent.

Indus Towers also faced substantial losses, with its stock price falling over 14 per cent before partially recovering to Rs 397, marking a 7.5 per cent drop. Conversely, Bharti Airtel’s shares rose by 2 per cent to Rs 1,701 per share on the NSE.

The Supreme Court's ruling follows a previous decision from 2020 regarding overdue AGR payments spanning more than a decade. The court's bench, comprising Chief Justice DY Chandrachud, Justice Sanjiv Khanna, and Justice BR Gavai, found no merit in the petitions' claims and declined to exercise curative jurisdiction.

Vodafone Idea’s curative petition had sought three main forms of relief: rectifying arithmetic and clerical errors in the AGR demand, limiting penalties to 50 per cent of the shortfall, and revising the interest rate on penalties to 2 per cent above the State Bank of India's prime lending rate.

The outcome of the Supreme Court's decision leaves uncertainty around Vodafone Idea’s ability to raise additional debt, which is critical for sustaining its capital expenditure plans. The AGR dues, which contribute to the government's revenue through licensing and spectrum usage fees, are calculated as a per centage of the AGR.

In related developments, Indus Towers’ board approved a share buyback on August 28, 2024, involving 5.67 crore shares, which will increase Bharti Airtel’s stake in the company to over 50 per cent, effectively making Indus Towers a subsidiary of Bharti Airtel.