Supreme Court Rejects Telcos’ Plea for AGR Dues Waiver

The petitions filed by Vodafone Idea (Vi), Bharti Airtel, and Tata Teleservices asking for a waiver of their long-standing adjusted gross revenue (AGR) obligations were denied by the Supreme Court on 20 May.

As part of their AGR obligations, the telcos sought relief from the payment of interest, penalties, and interest on penalty components. A bench of Justices J B Pardiwala and R Mahadevan referred to the plea as "misconceived" and stated that the court will not block the Centre's decision to provide relief to these corporations. "We will not stand in your way if the government wishes to assist you," Pardiwala stated.

Bad News for Vodafone Idea

According to experts, the recent decision may have serious repercussions for Vodafone Idea (Vi), which is already having difficulties. The telco has stated that without assistance, it will not be able to continue operating into FY26. Analysts speculated that it might even be on the verge of going bankrupt.

 Department of Telecommunications (DoT) officials noted that it was doubtful that the government would acquire any additional share in Vi, citing the court's ruling on government assistance. The Bench stated that the petitions "really shocked" it. "Very uneasy. An international corporation is not expected to do that. We'll ignore it," the Bench noted.

 Vi, who is expected to be most affected, informed the court via senior advocate Mukul Rohatgi that the Centre is unable to save the company because of earlier rulings from the Supreme Court. "You know, all we are saying is that the government is now 50% owner of my company," Rohatgi said to the Bench.

However, they replied that because of the decision, we are powerless to assist. Their response is based on the Supreme Court's ruling rather than saying, "We won't look at your representation."

Government not Keen on Expanding its Stake in Vi

Solicitor General Tushar Mehta, who represented the Centre, stated, "What we have said is that, in view of the judgement of the Lordships, we cannot examine (the relief sought)." According to DoT officials, the government is not interested in increasing its holding beyond what it now has because doing so would essentially make the carrier a public sector organisation.

 According to another DoT official, Vi has already asked the DoT for relief in a number of ways, including asking it to recalculate the AGR. "But the matter has been resolved by previous rulings," he stated.

 In a letter dated April 29, DoT most recently denied the telco's request, claiming that the 2020 Supreme Court ruling precluded further concessions on AGR obligations. Earlier this month, Vi exchanged INR 36,950 crore in unpaid spectrum auction debt into government equity shares.

Consequently, the Centre's ownership stake in the telco rose from 22.6% to 48.9%. In order to retain governance and management powers, Vi modified the shareholders' agreement earlier in May to lower the qualification criteria for promoter groups, including the UK-based Vodafone and the Aditya Birla Group.