/images/ppid_59c68470-image-176154765696358545.webp)
/images/ppid_59c68470-image-176130755975959972.webp)
What is the story about?
Shares of Vodafone Idea Ltd. gained over 6% on Monday, October 27, after the Supreme Court's verdict on the telecom company's additional adjusted gross revenue (AGR) dues plea.
The Supreme Court, in its order, observed that in light of peculiar facts such as the Centre's stake in the telecom company, and considering the impact on 20 crore consumers, it sees no impediment in the Centre reconsidering the issue and taking an appropriate call.
It clarified that this is a matter within the policy domain of the Centre and larger public interest merits reconsideration.
India's Solicitor General, representing the Department of Telecom (DoT) or the Centre, said there is a huge change in circumstance as the government has 49% equity stake in the company, and public interest in now at play. The telecom also has 20 crore customers. If the company suffers, it would hurt competition and consumers, the Solicitor General said, adding that the Centre is not going in recomputation of AGR dues but is proposing a solution, subject to court approval.
The Solicitor General then submitted the proposal to the Supreme Court.
Earlier on October 13, the top court had deferred its hearing after the Centre sought more time. The Supreme Court had observed that it wanted the Centre to take a specific stand and deferred its hearing after Diwali celebrations, on October 27.
September 19: The Centre told the Supreme Court it does not oppose the telecom company's plea. However, a solution is required as it is an equity holder in the firm as well. The Supreme Court observed there had to be some finality to the proceedings and deferred the hearing to September 26.
September 26: India's Solicitor General Tushar Mehta, representing the Department of Telecom (DoT), on behalf of the Centre, sought more time from the court. The telecom company said it did not have objections to the same. The verdict was delayed to October 6.
October 6: The top court adjourned Vodafone Idea's plea to October 13 after the Centre sought more time again. The Vodafone Idea counsel said, ""We are not opposed to the grant of more time to the government, we want to celebrate Diwali this year."
October 13: The Centre sought more time during the previous hearing, post which, the top court then set the hearing date post Diwali on October 27.
October 27: In a major relief for the telecom company, the Supreme Court observed there is no reason why the Centre should be prevented from reconsidering the issue. The order is applicable only in the peculiar facts and circumstances of this case, given the equity stake and 20 crore customers, the top court observed/
One-time settlement in the works: Report
Earlier this month, news agency Bloomberg reported, citing sources that the Centre is weighing on a resolution for Vodafone Idea dues to bolster its ties with the UK. The Centre is considering a one-time settlement, it reported. The resolution could be a waiter of interest and penalties, which would be followed by a concession on the principal, Bloomberg reported, adding that the Centre officials were drafting the framework.
Vodafone Idea has petitioned regarding DoT's additional AGR demand of ₹9,450 crore, arguing that it is beyond the scope of the court's previous ruling on AGR liabilities.
Previously, DoT had filed an affidavit defending its stance, as per reports. It said the additional dues were a 'gap' from the previous accounting and not a reassessment. It maintained these liabilities emerged after the completion of financial accounts and were not covered under the Supreme Court's 2019 judgment.
A total of ₹2,774 crore of the ₹9,450 crore comprises the FY18-19 dues of the merged Vodafone Idea and Idea group entity and their consolidation in August 2019. A total of ₹5,675 crore is with regards to the pre-merger Vodafone Group.
Vodafone Idea has contested the calculation, claiming some amounts were duplicated. It has sought fresh reconciliation starting pre-2017.
In August, Chandra Sekhar Pemmasani, the minister of state for communications, told CNBC-TV18 that the Centre is not looking at extending any more relief to the financially-stressed company.
He referred to the 2021 support package, as per which around ₹53,000 crore of the company's dues were converted into equity, giving the Centre a 49% stake. ""Whatever we wanted to do has already been done. Vodafone is up to their management… they know how to manage and it's up to them to take it forward," Pemmasani said.
The Centre is the largest stakeholder in Vodafone Idea, but is not classified as a promoter.
In July, Union telecom minister Jyotiraditya Scindia told CNBC-TV8 that the Centre did not plan to convert Vodafone Idea into a public sector undertaking (PSU).
Vodafone Idea shares were up 6.9% at ₹10.3 apiece around 11.45 am. The stock has gained 24.7% in the past month and is close to its FPO price of ₹11 per share.
The Supreme Court, in its order, observed that in light of peculiar facts such as the Centre's stake in the telecom company, and considering the impact on 20 crore consumers, it sees no impediment in the Centre reconsidering the issue and taking an appropriate call.
It clarified that this is a matter within the policy domain of the Centre and larger public interest merits reconsideration.
India's Solicitor General, representing the Department of Telecom (DoT) or the Centre, said there is a huge change in circumstance as the government has 49% equity stake in the company, and public interest in now at play. The telecom also has 20 crore customers. If the company suffers, it would hurt competition and consumers, the Solicitor General said, adding that the Centre is not going in recomputation of AGR dues but is proposing a solution, subject to court approval.
The Solicitor General then submitted the proposal to the Supreme Court.
Earlier on October 13, the top court had deferred its hearing after the Centre sought more time. The Supreme Court had observed that it wanted the Centre to take a specific stand and deferred its hearing after Diwali celebrations, on October 27.
A Timeline of Recent Events
September 19: The Centre told the Supreme Court it does not oppose the telecom company's plea. However, a solution is required as it is an equity holder in the firm as well. The Supreme Court observed there had to be some finality to the proceedings and deferred the hearing to September 26.
September 26: India's Solicitor General Tushar Mehta, representing the Department of Telecom (DoT), on behalf of the Centre, sought more time from the court. The telecom company said it did not have objections to the same. The verdict was delayed to October 6.
October 6: The top court adjourned Vodafone Idea's plea to October 13 after the Centre sought more time again. The Vodafone Idea counsel said, ""We are not opposed to the grant of more time to the government, we want to celebrate Diwali this year."
October 13: The Centre sought more time during the previous hearing, post which, the top court then set the hearing date post Diwali on October 27.
October 27: In a major relief for the telecom company, the Supreme Court observed there is no reason why the Centre should be prevented from reconsidering the issue. The order is applicable only in the peculiar facts and circumstances of this case, given the equity stake and 20 crore customers, the top court observed/
One-time settlement in the works: Report
Earlier this month, news agency Bloomberg reported, citing sources that the Centre is weighing on a resolution for Vodafone Idea dues to bolster its ties with the UK. The Centre is considering a one-time settlement, it reported. The resolution could be a waiter of interest and penalties, which would be followed by a concession on the principal, Bloomberg reported, adding that the Centre officials were drafting the framework.
The additional AGR dues plea
Vodafone Idea has petitioned regarding DoT's additional AGR demand of ₹9,450 crore, arguing that it is beyond the scope of the court's previous ruling on AGR liabilities.
Previously, DoT had filed an affidavit defending its stance, as per reports. It said the additional dues were a 'gap' from the previous accounting and not a reassessment. It maintained these liabilities emerged after the completion of financial accounts and were not covered under the Supreme Court's 2019 judgment.
A total of ₹2,774 crore of the ₹9,450 crore comprises the FY18-19 dues of the merged Vodafone Idea and Idea group entity and their consolidation in August 2019. A total of ₹5,675 crore is with regards to the pre-merger Vodafone Group.
Vodafone Idea has contested the calculation, claiming some amounts were duplicated. It has sought fresh reconciliation starting pre-2017.
Centre's view
In August, Chandra Sekhar Pemmasani, the minister of state for communications, told CNBC-TV18 that the Centre is not looking at extending any more relief to the financially-stressed company.
He referred to the 2021 support package, as per which around ₹53,000 crore of the company's dues were converted into equity, giving the Centre a 49% stake. ""Whatever we wanted to do has already been done. Vodafone is up to their management… they know how to manage and it's up to them to take it forward," Pemmasani said.
The Centre is the largest stakeholder in Vodafone Idea, but is not classified as a promoter.
In July, Union telecom minister Jyotiraditya Scindia told CNBC-TV8 that the Centre did not plan to convert Vodafone Idea into a public sector undertaking (PSU).
Vodafone Idea stock performance
Vodafone Idea shares were up 6.9% at ₹10.3 apiece around 11.45 am. The stock has gained 24.7% in the past month and is close to its FPO price of ₹11 per share.
Do you find this article useful?
/images/ppid_59c68470-image-176154271039321115.webp)
/images/ppid_59c68470-image-176154516622897745.webp)
/images/ppid_59c68470-image-17615326111691738.webp)
/images/ppid_59c68470-image-176155007409813970.webp)
/images/ppid_59c68470-image-176154759125390156.webp)
/images/ppid_59c68470-image-176154007908910322.webp)
/images/ppid_59c68470-image-176155262892481090.webp)
/images/ppid_a911dc6a-image-176145483297177281.webp)
/images/ppid_59c68470-image-176155014810891893.webp)
