Vodafone Idea Shares Tank After Supreme Court Defers AGR Hearing
Shares of Vodafone Idea Ltd. plummeted nearly 8% on Friday after the Supreme Court deferred the hearing on the AGR dues to October 6, dealing a significant blow to the already beleaguered telecom operator.
Background of the AGR Dispute
The AGR issue dates back over a decade, involving a prolonged dispute between telecom companies and the government over the definition of adjusted gross revenue. In its 2019 ruling, the Supreme Court upheld the government’s broader interpretation, which includes revenue from non-core operations. This dramatically increased the dues owed by several telecom operators.
Implications of the Supreme Court Ruling
In 2020, the apex court rejected any reassessment or recalculation of these dues and allowed the companies a 10-year window to pay them in installments, with interest. The government has become the single largest shareholder in Vodafone Idea after acquiring shares worth Rs 36,950 crore in lieu of outstanding spectrum auction dues in March.
Vodafone Idea’s Financial Woes
Vodafone Idea owes more than Rs 83,000 crore in AGR dues to the government at present — of which the company has sought a waiver on Rs 45,000 crore. The company has argued that the demand goes beyond the scope of the apex court’s earlier ruling on AGR liabilities, as per reports. Of the total dues, Rs 2,774 crore pertains to the post-merger Vodafone Idea entity, while Rs 5,675 crore relates to liabilities of the pre-merger Vodafone Group.
Market Reaction
Vodafone Idea stock fell as much as 8% intraday to Rs 7.90 apiece on the NSE, compared to a 0.6% decline in the benchmark Nifty 50. The relative strength index was at 72. It had declined 21% in the last 12 months and risen 3% on a year-to-date basis.
Broader Implications for the Indian Telecom Sector
The deferment of the AGR hearing has significant implications for the Indian telecom sector, which is already reeling under intense competition and regulatory pressures. The outcome of the case is likely to have far-reaching consequences for the financial health and viability of telecom operators in the country.
Investor Sentiment
Investors are closely watching the developments in the AGR case, as it has significant implications for the Indian stock market and the broader economy. The outcome of the case is likely to impact investor sentiment and influence market trends in the coming days.
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