Vodafone Idea to conduct urgent investor meet on September 23 after SC’s AGR verdict setback

Telecom major Vodafone Idea Ltd. announced on Friday, September 20, that it will conduct an urgent conference call with investors and analysts on Monday, September 23, to provide "an update on recent developments."

The announcement comes after the Supreme Court dismissed a batch of pleas filed by companies, including Vodafone Idea and Bharti Airtel, seeking correction of alleged errors in the Adjusted Gross Revenue (AGR).

Also Read: SC rejects Vodafone, Airtel curative petition hearing; ₹1.47 trillion AGR demand stands

“Vodafone Idea will host a conference call with its senior management on Monday, September 23, 2024, from 2.30 PM to 3.00 PM, to provide an update on the recent developments. The participants from the company for the call will be Akshaya Moondra, Chief Executive Officer (CEO) and Murthy GVAS, Chief Financial Officer (CFO) supported by the senior management team,” said Vodafone Idea in a regulatory filing to the stock exchanges.

SC rejects Vodafone, Airtel curative petition hearing on AGR dues

“Application for listing the curative petitions in open court is rejected,” a three-judge bench headed by Chief Justice of India DY Chandrachud said in its order dated August 30, issued on Thursday. “The curative petitions are dismissed in terms of the signed order. Pending application, if any, stands disposed of.”

The telcos' curative petitions urged the Supreme Court to reconsider its 2019 judgement in favour of the Department of Telecommunications (DoT) order seeking AGR and other non-revenue-related dues. Telcos claimed that DoT made “a grave error” in calculating AGR dues and imposed “arbitrary” penalty amounts.

The pleas sought corrections of clerical and arithmetic errors in the telecom department's calculations of AGR. The telcos also wanted the penalty to be limited to 50% of the pending dues instead of the full amount and that the interest rate on the penalty be lowered. The companies claimed the telecom department had imposed ‘arbitrary’ penalty amounts that should be lowered.

Senior advocate Harish Salve, appearing for Vodafone Idea, had urged the apex court's bench comprising Chief Justice of India D Y Chandrachud, Justice J B Pardiwala, and Justice Manoj Misra to consider the petition. 

The latest order from the apex court is a blow for Vodafone Idea and Bharti Airtel, which had hoped to reduce their burden of ₹1.47 trillion in AGR dues to the government. Lower payments could have helped loss-making Vodafone Idea reduce its debt burden, but with the rejection of its curative petition, its financial troubles may continue to mount.

Also Read: Vodafone Idea share price cracks 15% after Supreme Court rejects telcos’ plea on re-computation of AGR dues

Vodafone Idea share price trend

Shares of Vodafone Idea faced selling pressure in the last two trading sessions. The shares fell nearly 20 per cent in two sessions. On Friday, shares of the telecom settled 1.35 per cent higher at ₹10.52 apiece on the BSE.

Vodafone Idea has paid ₹7,900 crore ($1 billion) of its AGR dues. In Q1 of FY25, the telco's debt included ₹70,300 crore for AGR and ₹1.39 trillion for spectrum. Vodafone Idea had opted for a four-year moratorium on AGR and spectrum dues as part of the government's relief package in September 2021.

The Aditya Birla Group-backed telecom raised ₹18,000 crore from the country’s largest follow-on public offer in April and is in discussions with banks to raise debt and guarantees totalling ₹35,000 crore. The third-largest telco has a five-year ₹55,000 crore capex plan to rebuild its services and become competitive.

Also Read: Vodafone Idea narrows losses to ₹6,434 crore, revenues down, ARPU flat

Earlier this month, global brokerage firm Goldman Sachs maintained a ‘Sell’ rating on Vodafone Idea shares and predicted a target price of ₹2.5 apiece. The brokerage’s target implied a sharp downfall of 83 per cent from the prevailing price.

“Vodafone Idea has large AGR/spectrum-related payments starting in FY26; while the government has the option of converting some dues into equity, we estimate ARPUs would have to rise by ₹200-270 (120 per cent-150 per cent under different scenarios) versus December 2024E levels for Vodafone Idea to be sustainably free cash flow neutral, a low probability in the medium term in our view,” Goldman Sachs said in a report.