India Ratings has downgraded Vodafone Idea’s 3500-crore debt after the Supreme Court struck down the company’s review petition in the verdict on the adjusted gross revenue case, the telecom operator said in an exchange filing late on Friday.

The rating has been downgraded from BBB to BBB minus.

“India Ratings and Research has downgraded its rating on non convertible debentures of 3500 crore of erstwhile Vodafone Mobile Services Ltd (since merged with the company) as per the rating rationale uploaded on its website today," the company said.

Vodafone India and Idea Cellular has completed their merger in September 2018.

The downgrade is on account of “crystallisation of adjusted gross revenue related liabilities" post the dismissal of the review petition by the Supreme Court, Vodafone Idea said, adding that the apex court has agreed to hear the telco’s modification plea next week which seeks more time to pay these dues.

Meanwhile, the government will not take coercive action against mobile service providers that failed to meet the court-directed 23 January deadline to pay dues, after Vodafone Idea Ltd and Bharti Airtel Ltd sought more time, the department of telecommunications said in an internal note dated 23 January.

Mint has reviewed a copy of the letter.

The Supreme Court on Tuesday agreed to hear the pleas filed by Vodafone Idea, Bharti Airtel, and Tata Teleservices next week.

The 24 October order, which upheld the government’s definition of revenue after a 14-year court battle with telecom companies, has strained the already precarious financial situation of Vodafone Idea and Bharti Airtel.

Vodafone Idea owes more than 50,000 crore to DoT, while Bharti Airtel has to pay 35,586 crore. Tata Teleservices, which sold its mobile services business to Airtel, has dues of 14,000 crore.

Vodafone Idea chairman Kumar Mangalam Birla had said that the company would have to shut shop in the absence of relief from the government following the AGR verdict.