Vodafone Idea, one of India’s major telecom operators, has faced a significant financial blow. On 19 Sep, Thursday, Vodafone Idea share price dropped by a staggering 20%, hitting a 52-week low of Rs 10.33 on the Bombay Stock Exchange (BSE).
This decline is due to the Supreme Court’s rejection of a plea from telecom companies, including Vodafone Idea, to re-calculate their Adjusted Gross Revenue (AGR) dues. Investors are now left concerned about the potential for further declines.
Supreme Court Ruling on AGR Dues
The AGR dues issue has been a longstanding battle for telecom companies in India. The Supreme Court reaffirmed its previous ruling, maintaining the full AGR dues.
A trio judge bench headed by DY Chandrachud said in its order dated August 30, which was issued on 19 September. ” The curative petitions are dismissed in terms of the signed order. pending application, if any, stands disposed of.”
This decision means a financial burden of Rs 58,254 crore for Vodafone Idea. With the added interest, this amount has now increased to Rs 70,320 crore. The total liability of Vodafone Idea is ₹2,03,430 crore to the government.
This petition is for Vodafone Idea, Airtel, and other telecom companies to search for relief in the Supreme Court to re-evaluate the adjusted gross revenue. Vi and Airtel hoped to reduce AGR dues of ₹1.47 lakh crore.
The court’s decision greatly affected the company’s finances, which had already been under strain.
As a result of the Supreme Court ruling, Vodafone Idea share price experienced a sharp decline. The shares fell by 20%, hitting their 52-week low of Rs 10.33 on BSE. By the end of the trading session, the stock had settled at Rs 10.38, marking a 19.6% decrease in a single day. On a year-to-date (YTD) basis, the stock has plummeted by 38.91%, highlighting the immense pressure the company is facing.
Vodafone Idea’s financial strain is further evident in its promoter and government shareholdings. As of July 19, 2024, promoters held a 37.17% stake in the company, while the government’s shareholding was at 23.15%. Despite this, the company’s ability to pay its dues and continue operations remains in question. The stock’s continued decline signals a lack of investor confidence in Vodafone Idea’s financial future.
Brokerages expected a reduction of 35,000 crore in the Adjusted Gross revenue in the positive outcome of this curative petition.
Telecom Department’s Estimate vs Comapany’s Estimate AGR Dues
| Name | DoT’s Estimate | Company’s Estimate |
| Airtel | ₹43,980 | ₹13,004 |
| Vi | ₹58,254 | ₹21,533 |
| Tata Tele | ₹16,768 | ₹2197 |
Check out to get the idea, How Much Debt Does Vodafone Idea Have? AGR and Spectrum
The Future Planes of Vodafone Idea?
The future of Vodafone Idea appears uncertain. With the massive AGR burden and ongoing financial struggles, the company may have limited options. However, without a clear plan to tackle the AGR dues, the company faces an uphill battle.
Vodafone Idea’s board approved fundraising planning in February, which was approved by shareholders, leading to the company’s Rs 18,000 crore follow-on public offer (FPO) in April—the largest in India’s history.
The FPO, crucial to Vodafone Idea’s broader Rs 45,000 crore funding program, was a resounding success, being subscribed seven times, driven by strong demand from global institutional investors.
As a result, the government’s stake, previously the largest shareholder, decreased to 23% since it did not participate in the FPO. This funding initiative was a pivotal step for the company as it navigates its financial challenges, including the massive AGR dues.
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Conclusion
In summary, Vodafone Idea share price has taken a significant hit following the Supreme Court’s reaffirmation of the AGR dues ruling. The company now faces a financial burden of Rs 70,320 crore, which has led to a sharp decline in investor confidence. While the future remains uncertain, the company will need to find a solution to its financial woes in order to survive in the competitive telecom market.