In a major setback to India's telecom sector, the Supreme Court on September 19 dismissed curative petitions filed by major telecom players, including Bharti Airtel and Vodafone Idea, seeking a re-calculation of their adjusted gross revenue (AGR) dues. The companies had alleged errors in the computation of dues by the Department of Telecommunications (DoT), but the court found no merit in their claims.
The three-judge bench, led by Chief Justice of India DY Chandrachud, stated, "We have gone through the Curative Petitions and the connected documents. In our opinion, no case is made out within the parameters indicated in the decision of this court… The curative petitions are dismissed." Despite the petitions being filed earlier, the verdict, dated August 30, was only uploaded on September 19. The companies also requested an open court hearing for their petitions, but the bench denied this as well.
A curative petition is the last legal remedy available in the Supreme Court and is typically reviewed in private unless exceptional circumstances call for a public hearing. The court’s decision effectively ends the telecom companies' legal battle over the AGR dues issue.
Following the ruling, as of Thursday afternoon, Vodafone Idea's stock price plummeted by 14%, reflecting investor concerns over the company’s mounting financial woes. The company's AGR dues have grown to ₹70,320 crore as of FY24, and analysts warn that without relief from the court, its financial situation could worsen. Vodafone Idea’s plans to raise debt may now be delayed, which could further hinder its capital expenditure (capex) initiatives.
On the other hand, Bharti Airtel's stock saw a modest increase of 1.3%, buoyed by the potential for market share gains from a weakened Vodafone Idea. Analysts also see Bharti Airtel as well-positioned to capitalize on Vodafone's troubles, which could boost its competitive standing in the telecom sector.
This ruling brings the AGR issue, which has haunted Indian telecom companies for years, closer to a conclusion. The Supreme Court’s 2019 judgment required telecom companies to pay over ₹1 lakh crore in AGR dues, a figure the companies had disputed due to alleged computational errors. In July 2021, the court rejected their initial pleas for a re-calculation, and with this latest verdict, the path for re-assessment appears firmly closed.
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