Telecom stocks tumble after SC upholds DoT's definition of AGR

Vodafone Idea was down over 22% while Bharti Airtel bounced back after falling as much as 10% in intraday trade.

The Supreme Court (SC) on Thursday ruled in favour of the government on the AGR (adjusted gross revenue) issue, with grave revenue implications to the tune of over Rs 92,000 crore for the ailing telecom sector.

This comes as major blow for telecom operators like Bharti Airtel and Vodafone Idea, as the companies will have to shell out a massive Rs 50,000 crore of the AGR.

Vodafone Idea tanked 22.12% to Rs 4.4.

Bharti Airtel was up 3.05% to Rs 371.05. It fell as much as 9.68% to hit an intraday low of Rs 325.60.

Grasim Industries was down 4.94% to Rs 706.45. Grasim Industries has exposure to the telecom sector via its 11.55% stake in Vodafone Idea.

Reliance Industries, which controls Reliance Jio Infocomm, was trading 3.08% higher at Rs 1435.70.

SC on Thursday upheld the definition of adjusted gross revenue (AGR) provided by the department of telecommunications (DoT), putting an end to a 14-year old legal battle between telecom operators and the government.

AGR is the basis on which DoT calculates levies payable by operators. Telecom operators are liable to pay around 3-5% and 8% of the AGR as spectrum usage charges and licence fees, respectively, to DoT.

Telcos argued that AGR should comprise revenue from telecom services, but DoT insisting that AGR should include all revenue earned by an operator, including that from non-core telecom operations.

According to media reports, Bharti Airtel will have to pay Rs 21,682 crore and Vodafone Idea will have to pay Rs 28,308 crore. For Jio, the amount is just Rs 13 crore as it entered the sector only three years ago.

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