Supreme Court rejects telcos' AGR review plea, shares slump

AGR plea issue: Supreme Court on Thursday turned down a request by telecom companies including Vodafone Idea and Bharti Airtel to recalculate the amount they owe the government in licence fees. This has come to the fore in a court order.

Meanwhile, the shares of Vodafone Idea and Indus Towers fell by around 15 per cent each after the apex court ruling, while Bharti Airtel turned negative for a brief period.

The telecom companies had in their argument had stated that the Department of Telecommunications made major errors in calculating the adjusted gross revenue (AGR) dues. AGR is the basis for license fee calculation owed to the government.

Vodafone Idea, Bharti Airtel and Indus Towers did not immediately respond to Reuters requests for comment.

The apex court had in 2021 rejected a similar plea to correct errors in AGR calculation, arguing that it should only take into account revenue accrued from their core services. The government had argued that it should include non-core revenue as well, such as money from rent or land sales.

Notably, Vodafone Idea, whose AGR burden grew to Rs 70,320 crore at the end of the FY24, on July 15 sought an urgent listing of its curative petition against the court's 2019 judgment on the payments to government.

Senior advocate Harish Salve who appeared for Vodafone told a bench led by Chief Justice of India DY Chandrachud that the curative plea was filed in September 2023. Salve added that considering there has been a restructuring in Vi and as a result the company’s backers want a closure to AGR issue.

“The company is already on the verge of a financial crisis, which threatens its very existence, and the judgment passed by this Hon’ble Court, prohibiting even the correction of clerical and arithmetical errors in the demands, foreclosing any reduction of the amount payable by thousands of crores of rupees and further imposing a penalty and interest on penalty, is highly unjust," the company said in its plea.

(With Reuters inputs)