Shares of Vodafone Idea Ltd and Indus Towers fell up to 15 per cent in Thursday's trade after the Supreme Court reportedly dismissed a plea to re-compute adjusted gross revenue (AGR) dues. Vodafone Idea earlier reported an AGR liability of about Rs 70,300 crore, including accumulated interest. VIL’s self-assessed AGR liability was 50 per cent lower at Rs 35,400 crore.
Vodafone Idea and other telecom firms had filed a curative petition for reassessment of the amount and a reduction or waiver of the penalty with the Supreme Court. The apex earlier heard this petition on August 30. Now the ruling is out.
Vodafone Idea shares were locked at 15 per cent lower circuit limit of Rs 10.98 on BSE. The stock recently got under pressure after global brokerage Goldman Sachs suggested a target of Rs 2.50 per share. Shares of Indus Towers declined 10 per cent to Rs 384.80.
Vodafone Idea has gross debt of Rs 2.1 lakh crore, out of which only about $600 million is owed to banks & financial institutions, with the remainder payable to the government of India towards spectrum and AGR dues. These government dues are currently under moratorium until October 2025, after which Vodafone Idea will have substantial payment obligations.
The telecom operator had sought corrections in the AGR calculations, a penalty reduction, and interest rate adjustments.
"The company’s recent filings show Vodafone Idea’s repayment obligation would be $3.3 bn in FY26, rising to US$5 billion in FY27 (excluding dues not under moratorium). We estimate Vodafone Idea’s Ebitda generation post the recent tariff increase is about $1.5 billion a year," Goldman Sachs said recently.
Many stock brokerage had suggested target prices on Vodafone Idea based on assumptions that it may get some relief on AGR front. Goldman Sachs had in fact suggested a target price of Rs 2.50 in its base case and Rs 19.50 in its blue sky scenario.
A favourable outcome could have significantly reduced the telecom operator's AGR debt burden. Potential benefits, as per Citi, were estimated at Rs 4-5 per share or even higher.