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Telecommunications industry

Centre to Take Legal View on Vodafone Idea's AGR Dues Relief

Strategic Insights

— 2 min read

The Centre has announced that it will take a legal view on the Supreme Court's order on Vodafone Idea Ltd's additional gross revenue (AGR) dues before providing any relief to the beleaguered telco. The apex court's order has clarified that the dues apply solely to Vodafone Idea, restricting its claim to the additional gross revenue demand raised by the department of telecommunications for the period up to 2016-17. This assumes significance given that Vodafone Idea may not receive enough financial benefit if the relief is restricted to the additional gross revenue demand, which is around Rs.5,600 crore. Analysts at Emkay Global predict that the Centre will now have sufficient room to devise a plan for Vodafone Idea's long-term sustainability, as the government will need to consider plans toward reducing the spectrum debt as well.

Key Takeaways:

  • The Centre will take a legal view on the Supreme Court's order on Vodafone Idea Ltd's AGR dues before providing any relief to the beleaguered telco.
  • The apex court's order has clarified that the dues apply solely to Vodafone Idea, restricting its claim to the additional gross revenue demand raised by the department of telecommunications for the period up to 2016-17.
  • Vodafone Idea may not receive enough financial benefit if the relief is restricted to the additional gross revenue demand, which is around Rs.5,600 crore.
  • The Centre will need to consider plans toward reducing the spectrum debt as well to ensure Vodafone Idea's long-term sustainability.
  • Brokerage firm Emkay Global sees a low chance of the government reversing the current outstanding Rs.37,100 crore additional gross revenue dues of Bharti Airtel Ltd.
  • Shares of Vodafone Idea were down 7% at Rs.8.71 on the National Stock Exchange on Thursday.
  • Emkay Global notes that leverage for Vodafone Idea remains higher even without additional gross revenue dues.

Statistics:

  • The additional gross revenue (AGR) dues of Vodafone Idea Ltd is around Rs.5,600 crore.
  • The outstanding additional gross revenue dues of Bharti Airtel Ltd is Rs.37,100 crore.
  • Vodafone Idea serves nearly 200 million consumers.
  • Shares of Vodafone Idea were down 7% at Rs.8.71 on the National Stock Exchange on Thursday.
  • The Supreme Court's order is crucial for Vodafone Idea's long-term sustainability, as the company has a leverage higher than that of Bharti Airtel Ltd.

Sources:

  • "Government likely to offer no relief to Vodafone Idea on AGR dues", Hindu BusinessLine, 31 October 2022
  • "Vodafone Idea shares fall 7% after Supreme Court's order", Business Standard, 27 October 2022
  • "Emkay Global sees low chance of Vodafone Idea getting relief on AGR dues", Business Today, 27 October 2022

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