Vodafone Idea shares drop 3% after AGR dues hearing pushed to October 27

Shares of Vodafone Idea Ltd. declined 3% on Monday, October 13, as the Supreme Court deferred its plea on the additional adjusted gross revenue (AGR) dues again, after the Centre sought more time.

India's Solicitor General asked for more time on behalf of the Department of Telecom (DoT). The Supreme Court observed that it wants the Centre to take a specific stand. It deferred its hearing to after Diwali, on October 27.

This is the fourth hearing deferrment in the past month.

Timeline of delayed hearings

September 19: The Centre told the top court it does not oppose Vodafone idea's plea, but some solution is required as it too is an equity holder in the firm. The top 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 top court. Vodafone Idea said it had no objections to the same. The top court set October 6 as the date for its verdict.

October 6: The Supreme Court adjourned Vodafone Idea's AGR plea to October 13 after the government sought more time. The Vodafone Idea counsel said the company did not object to the same, adding, "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 again. The Supreme Court has now set the hearing date after Diwali, on October 27.

One-time settlement in the works: Report

Last week, news agency Bloomberg reported, citing sources that the Centre is weighing on a resolution for Vodafone Idea dues to bolster UK ties. The government is considering a one-time settlement, the news agency reported. The resolution may come via waiver of interest and penalties, which will be followed by a concession on the principal, the news agency reported, adding that the government officials were drafting the framework.

The plea

The telecom company's plea is against the DoT's additional AGR demand. It petitioned to the Supreme Court to set DoT's demand for ₹9,450 crore in additional AGR dues, arguing that it is beyond the scope of the court's previous ruling on AGR liabilities.

DoT had previously 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 that these liabilities emerged after the completion of financial accounts and were not covered under the Supreme Court's 2019 judgment.

As much as ₹2,774 crore of the ₹9,450 crore comprises the FY18-19 dues of the merged identity Vodafone Idea and Idea group after their consolidation in August 2018. A total of ₹5,675 crore is with regards to the pre-merger Vodafone Group.

Vodafone Idea contested the calculation, claiming some amounts were duplicated. It has sought fresh reconciliation starting pre-2017.

Centre's view

In August, the minister of state for communications Chandra Sekhar Pemmasani told CNBC-TV18 that the Centre is not looking at extending any more relief to the financially-stressed firm.

Referring to the 2021 support package, as per which around ₹53,000 crore of dues were converted into equity, giving the Centre a 49% stake, Pemmasani said, "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."

The Centre is the largest stakeholder in Vodafone Idea, but is not classified as a promoter.

A month prior, telecom minister Jyotiraditya Scindia told CNBC-TV18 that the Centre did not have any plans to convert Vodafone Idea into a public sector undertaking (PSU).

Stock performance

Shares of Vodafone Idea declined nearly 3.7% to hit an intraday low of ₹8.71 apiece. The stock was down 1.3% at ₹8.92 apiece around 11.50 am. The stock has gained 10% in the last one month.

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