Supreme Court opens door for Vodafone Idea, allows centre to reconsider AGR dues case – Key details inside

Vodafone Idea Ltd. (Vi) is all set to go before the Supreme Court of India(BHARAT) today to seek quashing of a fresh adjusted gross revenue (AGR) dues notice of ₹5,606 crore sent by the Department of Telecommunications (DoT) for 2016-17.

Led by a Bench of Chief Justice B. R. Gavai and Justices K. Vinod Chandran and Vipul M. Pancholi, the apex court will hear the petition filed by Vi, which states that the DoT has violated its order dated 1 February 2020 while sending the notice.

The firm has further said that it would like the DoT’s order to be quashed and for the regulator to be “directed to comprehensively re-assess and reconcile all AGR dues up to FY 2016-17, in accordance with the ‘Deduction Verification Guidelines’ dated 3 February 2020”.

It added, “Vi is of the considered view that the said Demand Notice, as sent, is liable to be quashed in its entirety for, inter alia, material duplications of entries and arithmetical mistakes.”

The legal tussle is in the backdrop of a high AGR-related issue in the telecom sector, which deals with the metric that the government has taken to levy licence fee and spectrum charges from the industry. The non-telecom income such as interest or asset sale money were part of the overall AGR earlier but has been relaxed by 2021 to make non-telecom income part of the company income and not a part of the AGR.

A fresh demand sent by the DoT, which has asked Vi to pay ₹5,606 crore additional AGR dues, comes when the Supreme Court had set a ten-year period for telecom operators to clear all outstanding AGR dues in September 2020.

At March 2025, Vi had outstanding AGR dues of about ₹83,400 crore, while it had deferred liabilities (spectrum and AGR dues) of close to ₹1.99 lakh crore. Since the government itself has over 50 per cent equity stake in the firm, through its prior recapitalisation moves Solicitor General Tushar Mehta had told the court on several occasions that Vi’s survival has become a matter of national interest.

The Department of Telecommunications, on the other hand, has maintained that the notice was sent as per the earlier judgement of the court, saying that while the government is open to discussions, its legal stance on the issue will not be watered down.

As the court resumes after a Diwali recess, it is expected that the next hearing will be taken up by the CJI-led Bench today. Vi is hoping for a positive order, as an unfavourable one can crimp the company’s flexibility to restructure and operate viably.

Update: Supreme Court allows Centre to revisit AGR issue for Vodafone Idea

SC hints no bar to Centre reconsidering AGR demand against Vodafone Idea.

In a major development, the Supreme Court has suggested that there is no bar to the Centre “reconsidering” the AGR demand it has raised against Vodafone Idea.

This follows the Centre’s stated willingness to hear VIL’s request and take appropriate action, if allowed by the court.

Vodafone Idea: What the update means?

Opening of policy domain: The SC has effectively agreed that this is a policy matter for the government and allowed the Centre to “reconsider” the AGR issue in the present circumstances.

Market sentiment: On the back of this development, Vodafone Idea’s shares rose by 7-10 % on the announcement day, as investors see the possibility of the company getting some relief or at least a way to lighten its burden.

Role of government: The Solicitor-General, appearing for the Centre during the hearing, had pointed out that the government owns almost 50 % of Vodafone Idea and therefore had an interest in the continuance of the telecom operator.

Vodafone Idea’s fresh plea: Vodafone Idea has filed a fresh plea in the SC challenging the Department of Telecommunications (DoT)’s demand of about ₹5,606 crore for the FY 2016-17 period and seeking a “reassessment” of AGR dues in accordance with the Deduction Verification Guidelines issued in February 2020.

Why the shift is significant?

This shift is significant because the AGR issue has been a major over-hang on Vodafone Idea’s books and weighed down its balance sheet. In the past,

The SC in 2021 had dismissed telecom companies’ pleas to correct alleged errors in AGR computation. The judgement said that the DoT had the “discretion” to fix AGR and there was no miscalculation or bias.

Vodafone Idea has been hit hard by the high AGR dues. In case of VIL, cumulative dues (license fee, spectrum usage charge, interest, penalty) have run into several thousand crores, adding to its already weak financial position.

Allowing the Centre to reconsider the issue, while not guaranteeing any relief, opens the door to at least a possibility of some respite or at least a manageable timeline/resolution path for VIL.

Key watch-outs

Centre’s response: Having got the green light from the SC to re-open the issue, the Centre now has to set out the terms and time-frame within which it will reassess VIL’s AGR dues.

Nature of any relief: What form will any relief take? Will it cover waiver/reduction of interest/penalties, recalculation of dues, or is it only a reassessment of the facts? VIL’s earlier amended petition had demanded waiver of interest and penalty.

Impact on VIL’s financials: If the DoT gives VIL some substantial relief, or if the matter is resolved on an agreeable basis, Vodafone Idea’s balance sheet could get a marked boost, which in turn could aid the company in debt servicing and give it a fighting chance of survival.

Precedent for telecom sector/other regulatory actions: How the DoT and the government handle this issue may also set a precedent for other telecom companies and how the AGR liability issue is viewed in future policy/regulatory decisions.