Vi shares surge 9% as SC schedules AGR hearing
What's the story
Vodafone Idea's shares surged by a whopping 9% on Monday. The spike came after the Supreme Court tentatively scheduled a hearing for the telecom operator's plea against the Department of Telecom's (DoT) additional Adjusted Gross Revenue (AGR) demand. The hearing is set for September 19. The company's stock also witnessed heavy trading volumes during this time.
Legal battle
Vodafone Idea challenges DoT's demand
Vodafone Idea has challenged the DoT's demand for ₹9,450 crore in additional AGR dues. The company argues that the demand exceeds the scope of a previous Supreme Court ruling on AGR liabilities. The DoT, in its affidavit, has defended its position by saying that these additional dues are not a reassessment but rather a 'gap' from earlier accounting.
Dues details
Breakdown of additional AGR dues
Of the total ₹9,450 crore in additional AGR dues, ₹2,774 crore pertains to FY18-19 dues of the merged entity (Vodafone Idea and Idea Group post their August 2018 consolidation). The remaining ₹5,675 crore relates to pre-merger Vodafone Group. However, Vodafone Idea has contested these calculations, claiming some amounts were duplicated and has sought a fresh reconciliation starting from pre-FY17.
No further relief
Government won't provide further relief to Vodafone Idea
Minister of State for Communications Chandra Sekhar Pemmasani has said that the government will not provide any further relief to the financially stressed telco. Pemmasani said "Whatever we wanted to do has already been done." He was referring to a 2021 support package where nearly ₹36,950 crore of dues were converted into equity, giving the Centre a 49% stake in the company.
Ongoing challenges
Vi's survival amid challenges
Vodafone Idea continues to face high debt, fierce competition from Reliance Jio and Bharti Airtel, and pending AGR dues. The government's decision indicates that the telco will have to depend on internal measures, fundraising, or market partnerships to survive. The DoT is not considering any new concessions for Vodafone Idea beyond those already provided.