Voda Idea clocks worst fall since January 2022 after SC rejected telcos' curative plea on AGR dues

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The Supreme Court on September 19 rejected a bunch of pleas filed by telecommunication companies, including Bharti Airtel and Vodafone Idea, for the re-computation of adjusted gross revenue (AGR) dues, dealing a huge setback to telcos.

Shares of Vodafone Idea registered their worst fall since January 2022, while Indus Tower posted its biggest fall since early June.

The stock of debt-laden Vodafone Idea ended near day's low with a 20 percent cut at Rs 10.38 on the National Stock Exchange. Indus Towers was down almost 9 percent at Rs 390. Bharti Airtel ended the session 0.60 percent higher at Rs 1,665.

In their curative petitions, the telecom companies had sought relief alleging grave error in the calculation of dues by the department of telecommunication.

"We have gone through the Curative Petitions and the connected documents. In our opinion, no case is made out within the parameters indicated in the decision of this court… The curative petitions are dismissed," the court said in the order, which was dated August 30 but was uploaded on September 19.

The three-judge bench, led by Chief Justice of India DY Chandrachud, also rejected the plea to list the curative petitions for open court hearing.

A curative petition is the last legal recourse in the apex court and is typically heard in-chamber unless a case is made out for reconsideration of the verdict.

An IIFL Securities analyst said if Vodafone Idea's planned debt raise won’t come through, it can delay its capex plans. The cash flow situation for Vodafone Idea is expected to become more challenging without relief from the court. It remains to be seen if Vodafone Idea, whose AGR burden grew to Rs 70,320 crore at the end of the FY24, can proceed with its debt-raising plans following the verdict.

The dismissal of the plea was a slight positive for Bharti Airtel with regard to potential market share gain, the analyst said.

On July 15, Vodafone sought an urgent hearing of its curative petition against the court's 2019 judgment on the payments to government.

“The company is already on the verge of a financial crisis, which threatens its very existence, and the judgment passed by this Hon’ble Court, prohibiting even the correction of clerical and arithmetical errors in the demands, foreclosing any reduction of the amount payable by thousands of crores of rupees and further imposing a penalty and interest on penalty, is highly unjust," the company had said in its plea.

The court had on October 9, 2023 taken note of submissions of telcos seeking listing of their pleas on AGR dues.

The petitions were filed after the court in July 2021 dismissed pleas seeking correction of errors in the demand of AGR dues. The companies had moved the court claiming there were several errors in arriving at the dues totalling to more than Rs 1 lakh crore.

The court gave the companies 10 years to clear their dues.

(With agency inputs)