Vodafone Idea moves Supreme Court against additional AGR dues raised by DoT

Vodafone Idea has petitioned the Supreme Court to quash fresh AGR dues raised by DoT, arguing the new demands exceed the court's ruling and threaten its financial survival

Vodafone Idea has moved a writ petition in the Supreme Court seeking directions to set aside the additional demand of adjusted gross revenue (AGR) dues by the telecom department while arguing that it belonged to the pre 2016-17 period that had been settled by the Supreme Court’s earlier ruling.

 

The apex court had in 2020 locked Vodafone Idea’s AGR dues till 2016-17 based on calculations by the department of telecommunications (DoT).

 

According to the petition details, seen by Business Standard, the DoT has raised a demand of ₹5,606 crore, which falls under the 2016-17 period on which the SC had ruled back in 2020, that there will be no recalculation of the dues, setting liabilities for Vodafone Idea at ₹58,254 crore.

 

 

The Aditya Birla group company has now sought a comprehensive reassessment of all AGR dues for periods till 2016-17 and asked for a recalculation of liabilities.

 

In its petition filed on Monday, the telco has asked the Supreme Court, “Issue an appropriate writ, order or direction quashing the demands issued by the respondent (department of telecom) raising additional AGR demands for the period till FY 2016-17 and direct the respondent to comprehensively re-assess and reconcile all AGR dues for the period till FY 2016-17.”

 

The amount included the principal, interest, penalties and interest on penalties, dealing a blow to the telecom firm that had since been saddled with government debt.

 

The company also argued that the company’s petitions that sought review of the SC’s 2020 decision were rejected. It added that DoT cannot unilaterally act and raise further additional AGR demands till 2016-2017 without first correcting the manifest arithmetical or clerical errors which exist in the demands already raised.

 

“Substantial liability created due to the AGR judgment, threatens the very existence of the petitioner company and in turn threatens the livelihood of thousands of employees working directly or indirectly with the petitioner. To add to the financial burden, the respondent has raised the impugned additional demands which are completely illegal and in teeth of the judgment passed by this court,” Vodafone Idea said in the petition.

 

“Therefore, either the demands till 2016-2017 should be treated as completely crystallised, as has been done by the Supreme Court, or there ought to be a just and fair reconciliation,” the plea said.

 

The DoT recently revised licence fee obligations of Idea Cellular and Vodafone Idea up to FY19, including an additional demand of ₹2,774 crore for FY18-19.

 

Vodafone Idea has contested the computation, alleging duplication of certain amounts, and pressed for reconciliation.

 

The company has argued that the revised demand will further strain its finances at a time when it is attempting to raise funds to promote its 4G coverage and accelerate 5G rollout.

 

The fresh demand falls within the government’s four-year moratorium on AGR payments, which ends in March 2026.

 

Once the moratorium expires, Vodafone Idea will have to start servicing instalments of ₹16,428 crore in AGR dues by March 2026, along with ₹2,641 crore in spectrum instalments due by June. With total government liabilities estimated at around ₹2 trillion, comprising AGR dues and deferred spectrum payments extending up to FY34, the financial burden on the company remains severe.

 

The operator has warned that without urgent relief, survival beyond this financial year may not be possible. It had told the DoT in May that it will not be able to continue operations beyond FY26 without government support on AGR dues.

 

Vodafone Idea told the court that resolving the AGR dispute is important to its survival as a going concern.

 

While the government’s conversion of over ₹36,950 crore of dues into equity last year taking nearly 49 per cent equity provided some respite, its total dues to the government have ballooned to ₹83,400 crore.

 

Vodafone Idea managed to raise funds from a 2024 follow-on public offer of ₹18,000 crore, required for launching 5G services and expanding 4G services, it continues to lose subscribers to its rivals Reliance Jio and Bharti Airtel.

 

The Supreme Court is likely to hear Vodafone Idea’s plea in the coming weeks.