Vodafone Idea shares decline 5% ahead of Supreme Court verdict on AGR dues plea

Shares of Vodafone Idea Ltd. declined 5% on Monday, October 6, as the Supreme Court is set to give its verdict on the company's additional adjusted gross revenue (AGR) dues plea.

The top court is set to give its verdict after setting new dates for the hearing twice in the past month.

Timeline of delayed hearings

September 19: The Centre told the Supreme Court that it does not oppose Vodafone Idea's plea, but some solution is required as it too is an equity holder in the company. The Supreme Court observed there had to be some finality to these proceedings and deferred the hearing of the plea to September 26.

September 26: India's Solicitor General Tushar Mehta, representing the Department of Telecom (DoT) on behalf of the Centre, sought more time from the Supreme Court. Vodafone Idea said it had no objections to the government seeking more time. The top court delayed its verdict to October 6.

October 6: The Supreme Court is set to give its verdict on the matter today.

The plea

The debt-laden telecom company's plea is against the Department of Telecom's additional AGR demand. Its petitioned to the top court to set DoT's demand for ₹9,450 crore in additional AGR dues, arguing that it is beyond the scope of the court's previous ruling on AGR liabilities.

As per reports, the DoT had previously filed an affidavit defending its stance, saying the additional dues were a 'gap' from previous accounting and not a reassessment. It maintained that these liabilities emerged after the competition of financial accounts and were not covered under the top court's 2019 judgment.

A total of the ₹2,774 crore of the ₹9,450 crore comprises the FY18-19 dues of the merged identity Vodafone IDea and Idea group after their consolidation in August 2018. As much as ₹5,675 crore is with regards to the pre-merger Vodafone Group.

Vodafone Idea contested the calculation, claiming some amounts were duplicated. It sought fresh reconciliation starting pre-2017.

Centre's view 

In August, Chandra Sekhar Pemmasani, the minister of state for communications, told CNBC-TV18 that the government is not looking at extending any additional relief to the financially-stressed telecom company.

Referring to the 2021 support package, as per which around ₹53,000 crore of dues were converted into equity, giving the Centre a 49% stake, Pemmasani said, "Whatever we wanted to do has already been done. Vodafone is up to their management… they know how to manage and it's up to them to take it forward."

The government is the largest stakeholder in the telecom company. However, it is not classified as a promoter.

In July, telecom minister Jyotiraditya Scindia told CNBC-TV18 that the Centre did not have any plans to convert Vodafone Idea into a public sector undertaking (PSU).

Stock performance 

After the Supreme Court delayed its hearing on September 19, brokerage firm Citi called the Vodafone Idea stock a "high-risk" buy with a price target of ₹10 apiece.

Shares of Vodafone Idea were down 5% at ₹8.38 apiece.

The stock has gained nearly 15% in the past month.

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