The Supreme Court recently dismissed Vodafone Idea and Bharti Airtel’s plea seeking a review of their adjusted gross revenue (AGR) dues. The telcos argued that errors in calculating their dues needed correction, which, if not addressed, could severely impact their financial health. This verdict marks another blow to Vodafone Idea, which has struggled to stay afloat amidst mounting debts and competitive pressures.
Following the verdict, Vodafone Idea’s shares plummeted by 10%, closing at the lower circuit of ₹11.61 on the National Stock Exchange (NSE). Meanwhile, Bharti Airtel’s shares rose slightly by 0.5%, reflecting investors’ confidence in Airtel’s relatively stronger financial position.
Key Points of Vodafone Idea’s Plea
1. Vodafone Idea sought corrections for perceived errors in the AGR dues calculation.
2. The company requested a reduction in penalties, limiting them to 50% of the shortfall.
3. It also called for a revised interest rate on the penalties, proposing a cap at 2% above the State Bank of India’s prime lending rate.
The Supreme Court’s decision exacerbates Vodafone Idea‘s financial woes, with an outstanding AGR burden of ₹70,320 crore at the end of FY24. The dismissal not only disrupts its cash flow but also puts its future plans for debt-raising and capital expenditure in jeopardy. On the other hand, this could potentially benefit Bharti Airtel, which stands to gain from Vodafone Idea’s declining market position.
With this setback, the road ahead for Vodafone Idea looks increasingly uncertain. Analysts suggest that the company might need to explore new funding avenues or strategic partnerships to survive. Meanwhile, Airtel may capitalize on this situation, further strengthening its market presence.
Credit: This article is based on information from NewsBytes.
Summary:
- The Supreme Court rejected Vodafone Idea and Bharti Airtel’s plea to re-calculate AGR dues.
- Vodafone Idea’s shares dropped by 10%, worsening its financial strain.
- The decision might benefit Bharti Airtel, which could gain more market share.
- Vodafone Idea’s future plans, including debt-raising, are now uncertain.
