Vodafone Idea Challenges Fresh AGR Dues In Supreme Court Amid Fundraising, 5G Rollout Plans

Vodafone Idea (Vi) shares rose nearly 2% on Wednesday after the company filed a writ petition in the Supreme Court to challenge the Department of Telecommunications' (DoT) latest calculation of its Adjusted Gross Revenue (AGR) dues. The company is seeking to have the additional tax demands set aside, arguing they exceed the scope of the Supreme Court's previous ruling. 

SEBI-registered investment advisor True North Capital shared its outlook on the ongoing legal matter between Vodafone Idea and the government. 

Disputed Tax Demands: 

The DoT has raised an additional AGR demand of ₹2,774 crore for FY18-19, which Vi is contesting, claiming that specific amounts have been counted twice. They said that the company's petition seeks a recalculation of its dues starting from the period before FY17. This fresh demand, coming on top of an earlier ₹5,960 crore claim, poses a significant financial strain on Vi. 

Fundraising Efforts: 

The revised demands come at a time when Vodafone Idea is in the process of raising funds to strengthen its 4G network and accelerate its 5G rollout. Vodafone Idea argued that these new liabilities will impact its efforts to improve its financial health and operational capabilities. 

The revised dues fall within the government's moratorium on AGR payments, which is set to expire on March 31, 2026. The Supreme Court is expected to hear the petition in the coming weeks.  

Vodafone Idea's total dues to the government amount to approximately ₹2 trillion, including penalties and interest. Of this, ₹83,400 crore is owed in AGR dues, with annual payments of ₹18,000 crore scheduled to commence in March.

Earlier this year, the debt-laden telecom operator had warned that without urgent government aid, survival beyond this financial year may not be possible.

 According to True North Capital, the outcome of the case will be critical for Vodafone Idea, as it will determine the extent of its liabilities and its ability to proceed with its crucial fundraising and network expansion plans.

What Is The Retail Mood? 

Data on Stocktwits shows that retail sentiment moved from ‘bullish’ to ‘extremely bullish’ by the end of August. 

Vodafone Idea shares have declined 7% year-to-date (YTD).

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