Some relief on the adjusted gross revenue (AGR) front looked possible for Vodafone Idea on Friday, with the Supreme Court agreeing to hear its plea against a fresh demand of Rs 9,450 crore from the department of telecommunications (DoT) on September 26, and the government not opposing the company’s petition.
This marks a departure from earlier proceedings, when in May the apex court had dismissed pleas by Vodafone Idea and its peers seeking waiver of interest and penalties on AGR dues.
Shift in government stance
Solicitor General Tushar Mehta, appearing for the Centre before a bench led by Chief Justice B R Gavai, along with Justices K Vinod Chandran and N V Anjaria, requested adjournment, stressing that discussions were underway to find a way forward given that the government now holds a near-50% stake in Vodafone Idea. “Some solution may have to be found out, subject to your lordship’s approval. If it can be kept next week, we can think of some solution,” Mehta told the court.
The observation reflected the changed position of the government, which in 2023 and 2025 converted dues worth Rs 53,083 crore into equity, emerging as Vodafone Idea’s largest shareholder with 48.99%.
The bench, however, also flagged the question of finality, with the Chief Justice observing that repeated litigation could undermine settled orders. “There has to be some finality to the proceedings,” he said, noting that an earlier bench had already refused recalculation.
The news saw Vodafone Idea’s stock surge 12.36% intra-day to Rs 8.82 before ending 7.13% higher at Rs 8.41 on the BSE. Bharti Airtel too gained, climbing to an intra-day high of Rs 1,976.45 (up 1.77%) before closing at Rs 1,962.35 (up 1.05%), making it the second-best performer on the Sensex.
Analysts said the latest turn signalled the government’s growing willingness to explore solutions outside of litigation.
New legal challenge explained
The latest case originates from the SC’s March 2020 order upholding DoT’s calculation of AGR dues up to FY17 and disallowing any reassessment by operators. Despite that, DoT issued fresh demands in August this year, citing unpaid licence fees and spectrum charges up to FY19, which with compounded interest pushed Vodafone Idea’s additional liability to Rs 9,450 crore. Of this, Rs 2,774 crore has been raised against the merged entity, while Rs 6,675 crore pertains to Vodafone Group for the pre-merger period.
In its petition, Vodafone Idea argued that Rs 5,606 crore of the new demand overlaps with periods already settled under the 2020 order, and therefore lacks legal basis. It urged the court to quash the claim or direct a reconciliation of accounts. The operator has warned that saddling it with further dues risks its ability to remain a going concern, jeopardising services to its 198 million subscribers and the jobs of 18,000 employees. The company already faces AGR liabilities of about Rs 83,400 crore, with annual instalments of Rs 18,000 crore beginning March 2026, alongside spectrum repayment obligations.