BENGALURU, Sept 19 (Askume) – India’s Supreme Court on Thursday rejected a request by telecom companies to recalculate the amount they pay the government, sending shares of debt-laden Vodafone Idea (VODA.NS) and its peers lower.
ICRA analysts estimate that Vodafone Idea and Bharti Airtel BRTI.NS owe about 1 trillion rupees ($12 billion) including spectrum and licensing fees. They did not disclose the amount owed by other companies.
The companies, in their final plea against a similar Supreme Court ruling in 2021 , argued that the transport department made errors in calculating the so-called adjusted gross revenue (AGR) dues.
Telecom companies have long said that only core service revenues should be considered in calculating dues, while the government has argued that non-core revenues like rental or land sale revenues should be included in AGR.
Supreme CourtThe verdict upheld the government’s definition of 2019 AGR calculation.
The latest decision is a setback for Vodafone Idea, which owes the government around Rs 70,000 crore in licence and spectrum fees, according to its latest quarterly report.
The Government of India is also one of the largest shareholders in the company, holding 23.1% of the shares.
Analysts do not expect the decision to have any major impact on Bharti Airtel as its financial position is strong.
Vodafone Idea shares fell nearly 20% following the news, while Bharti Airtel (BRTI.NS) fell briefly but later closed up 0.6%.
“If a positive decision is taken, Vodafone’s debt will reduce by Rs 35,000 crore,” said Balaji Subramaniam, research analyst at IIFL Securities.
He said the decision poses a challenge for Vodafone’s debt financing (Rs 25,000 crore) as banks are wary of investing in the company due to low cash flows.
“If the relief is approved, their annual cash flow will increase by Rs 8,000 crore.”
Vodafone Idea and Bharti Airtel did not immediately respond to Askume requests for comment.
(1 USD = 83.6180 Indian Rupees)
