Supreme Court defers hearing Vodafone’s plea against new ₹9,450 cr demand after govt seeks more time

Vodafone Idea Ltd investors celebrated after the Centre sought time to resolve the latest dispute over its statutory dues, citing consumer interest and its own stakeholding in the beleaguered telco.

Solicitor general Tushar Mehta told a Supreme Court bench that since the government now holds a significant stake in the country's third-largest telco, there has to be a solution that benefits consumers. He urged the court to hear the matter urgently next Friday to work towards a resolution.

“In the larger public interest—and essentially in the interest of consumers to maintain a balance in the competing market—the Government of India has also infused 50% equity. So, we are stakeholders as well. Some solution may need to be worked out, subject to Your Lordships’ approval. If it can be taken up next week, we can also consider possible options,” Mehta told the court. The court will hear the case on 26 September.

The dispute traces back to March 2020 when the top court finalized Vodafone Idea’s adjusted gross revenues (AGR) dues up to FY17 based on calculations by the Department of Telecommunications (DoT) and barred any self-assessment or reassessment. However, DoT demanded an additional ₹9,450 crore this year, prompting the telco to move court on 8 September, arguing that most of the new demand relates to periods already settled by the Supreme Court.

Chief Justice B.R. Gavai observed that since the court had already passed orders in four earlier petitions on the matter, there has to be finality. “Now, there has to be some final proceedings,” he remarked.

Shares of Vodafone Idea shot up 12.35% on the BSE, before shedding some gains to close 7.13% higher. The benchmark Sensex index closed 0.5% lower lower. The government came to own half of Vodafone Idea, after converting ₹53,083 crore of its dues into shares.

Vodafone Idea already owes around ₹83,400 crore in AGR dues, with annual payments of ₹18,000 crore starting March. Including penalties and interest, its total liabilities to the government are estimated at around ₹2 trillion. Vodafone Idea has previously said that its cash flows are insufficient to pay up the dues that have mounted over the years.

Vodafone Idea’s former chief executive Akshaya Moondra said in August that early resolution of the AGR dispute was critical for the telecom operator to secure bank funding.

The telecom operator has asked the Supreme Court to quash DoT’s additional demands for FY17 and earlier, and order a comprehensive reassessment and reconciliation of all AGR dues for that period. It warned that the hefty liability threatened its survival and “the livelihood of thousands of employees working directly or indirectly” with the company. Vodafone Idea serves about 198 million subscribers and employs more than 18,000 people.

Vodafone Idea also argued that DoT’s revised calculations—relating to licence fees (a percentage of AGR) and spectrum usage charges—are erroneous. If spectrum usage charges up to FY17 are included, the additional dues amount to about ₹6,800 crore as on 31 March 2025, it said.

In a 13 August letter, DoT said updated outstanding licence fee dues up to FY19 had not been tabulated in the Supreme Court’s 1 September 2020 order. It added that the revised amounts were calculated with interest and penalties up to October 2019, and updated with interest at 8% per annum through March 2025.

In April, Bharti Airtel also asked DoT to convert its AGR dues of about ₹40,000 crore into equity, which could give the government a 3-4% stake.

Airtel later said it was ready to pay the dues but expected similar relief as any other telecom operator. Mint earlier reported that Airtel is unlikely to join Vodafone Idea in this latest Supreme Court move.

The AGR dispute dates back to 2019, when the Supreme Court ruled that telecom operators must pay statutory dues on AGR, including non-telecom revenues. At that time, DoT pegged Vodafone Idea’s dues at ₹58,254 crore—far higher than the company’s self-assessed estimate of ₹21,500 crore. The apex court rejected curative petitions from Vodafone Idea and other operators in August 2024, and in May this year dismissed Vodafone Idea’s plea for a waiver on ₹45,000 crore in interest and penalties on its ₹83,400 crore dues.