Relief for Vodafone Idea as Supreme Court orders govt to reassess AGR dues up to FY17
The clarification relates to the top court's 27 October order, which didn't clarify whether it applied only to Vodafone Idea’s plea over additional AGR dues of around ₹9,500 crore or to its total pending AGR dues of around ₹84,000 crore.
The Supreme Court on Monday clarified that the government could reassess and reconsider all of Vodafone Idea’s adjusted gross revenue (AGR) dues as of FY17, including interest and penalties, delivering significant relief to the cash-strapped telecom company. AGR is the income figure used to calculate the licence fees and spectrum charges that telecom companies must pay the government.
The clarification relates to a Supreme Court order dated 27 October, in which the Court restricted the relief to Vodafone Idea on the additional AGR dues for period up to FY17. The additional AGR demand raised by the government from the telecom operator for the said period is around ₹5,606 crore. However, overall the company's AGR dues stands at ₹83,400 crore.
Vodafone Idea in its petition dated 18 September had requested the apex Court to quash the additional AGR demands for the period upto FY17 and direct the government to reassess and reconcile all AGR dues for the said period.
In the order, a bench comprising chief justice B.R. Gavai and justice K. Vinod Chandran had observed that Vodafone Idea’s petition restricted its claim only to the additional AGR demand raised by the department of telecommunications (DoT) for the period up to FY17.
“The telco requested the Supreme Court to ask the government to reassess and reconsider all AGR dues up to FY17, including interest and penalties,” Mahesh Agarwal, Vodafone Idea's advocate in Supreme Court told Mint.
“The telco requested the Supreme Court to ask the government to reassess and reconsider all AGR dues up to FY17, including interest and penalties,” said Mahesh Agarwal, Vodafone Idea's advocate in Supreme Court.
While the written order is awaited, the clarification means the government will have to reassess the entire amount owed, and not just the additional demand, increasing the scale of relief to the struggling telecom operator in which the government owns a 49% stake.
Shares of Vodafone Idea shot up more than 9% on the National Stock Exchange on Monday in reaction to the news.
Hobbled by AGR dues
Vodafone Idea already owes around ₹83,400 crore in AGR dues to the government, with annual payments of ₹18,000 crore starting in March. Including penalties and interest, its total liabilities to the government are estimated at around ₹2 trillion.
The company has previously said its cash flows were insufficient to pay the dues, which have been mounted for years. Vodafone Idea’s former chief executive Akshaya Moondra said in August that an early resolution of the AGR dispute was critical for the telecom operator to secure funding from banks.
In September, the telecom operator asked the Supreme Court to quash DoT’s additional demands from 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 over 18,000 people.