Supreme Court Allows Reassessment of Vodafone Idea's AGR Dues

The Supreme Court has permitted the Indian government to reassess Vodafone Idea's (Vi) adjusted gross revenue (AGR) dues. This decision is intended to support the struggling telecom company and is within the government's policy domain. The significant equity held by the government in Vi, due to consumer interest, was a key factor in this decision.

Key Details

• Government Stake: The Centre holds a 49% stake in Vodafone Idea.
• User Base Concerns: As of September 2025, Vi has 202.8 million subscribers.
• Legal Representation: Solicitor General Tushar Mehta represented the government, while Senior Advocate Mukul Rohatgi represented Vi.
• Consumer Interests: The case impacts 20 crore customers, emphasizing the need for government intervention.

Impact and Reactions

• Vi's Perspective: The decision is seen as a positive development and an impetus to the Digital India vision.
• Stock Market Reaction: Vi’s stock rose by 9.3% to a 52-week high, closing at ₹10.02, up 4.16%.
• Industry Impact: The ruling offers the government flexibility to address financial stress in the telecom sector.

Legal and Financial Implications

• The court's ruling allows Vi a window to negotiate relief for its dues but does not automatically waive them.
• Other telecom operators may seek similar discussions with the Department of Telecommunications (DoT).
• The decision could reduce regulatory overhang and provide clarity and stability in the telecom sector.

Background of the Case

• The decision was prompted by a plea from Vi in September seeking reassessment of AGR dues up to 2016-17.
• Vi sought a waiver of interest and penalties, arguing there was no default as the principal amount had not been finalized.
• In 2020, the Supreme Court had fixed Vi’s AGR dues at ₹58,254 crore, which have risen to ₹83,400 crore due to additional demands.
• Vi is required to begin annual payments of ₹18,000 crore from March 2026.

Financial Strategy and Challenges

• Vi's effort to secure bank funding is contingent on resolving the AGR issue.
• The company has raised ₹18,000 crore through a public offer in 2024 and plans capital expenditure of ₹50,000–55,000 crore over the next few years.

Legal Proceedings and Arguments

• Previous petitions seeking waivers of interest and penalties were dismissed.
• The court has emphasized the need for finality in AGR litigation.
• AGR disputes stem from the inclusion of non-core telecom revenue, like hotel revenue, in AGR calculations.