Vodafone Idea Share News: Vodafone-Idea (Vi) shares saw a sharp rise of 9% on October 27. The Supreme Court said that if the government wants, it can reconsider the company’s request in the AGR case.
Vodafone Idea Share: On October 27, there was a huge jump in the shares of Vodafone-Idea. Till 12 am its share was trading at Rs 10.11 on NSE, which is a gain of more than 5%. Earlier the stock had also risen by 9%. In fact, the Supreme Court said, ‘There is no reason why the Central Government should not reconsider the AGR request of Vodafone-Idea.’ The remarks were made by a bench of Chief Justice BR Gavai, Justice K Vinod Chandran and Vipul M Pancholi. The court said that this order has been passed in special circumstances and in the interest of 20 crore users.
impact on stock market
This relief of Vodafone Idea had an impact on the entire telecom sector. Indus Towers shares jumped up to 5%. Bharti Airtel shares were trading up about 3%. Investors saw this as a positive policy signal from the government.
What is AGR dispute?
AGR (Adjusted Gross Revenue) is the revenue figure on the basis of which telecom companies pay license fees and spectrum charges to the government. Earlier AGR included not only telecom income but also non-telecom income (like interest, asset sale etc.). This put a huge burden on the telecom companies. In 2021, the government changed the rules and excluded non-telecom income from AGR, which reduced the financial pressure of companies.
What was the demand in Vodafone Idea’s petition?
Vodafone-Idea has appealed to the Department of Telecommunications (DoT) to re-assess its AGR dues for 2016-17. The company has filed a new petition demanding Rs 5,606 crore and said that there are many arithmetic errors and duplicate entries in the calculation of AGR. A demand has been made to direct DoT to conduct comprehensive reconciliation of all dues under the Deduction Verification Guidelines of February 2020.
Government’s stance
Solicitor General Tushar Mehta said, ‘The government has about 50% equity in Vodafone Idea, which means the government itself is a direct stakeholder in the survival of the company. It is necessary to reach a solution. The central government also indicated that efforts are underway towards a resolution with the company.
Old order of Supreme Court
In September 2020, the Supreme Court had said that telecom companies will have to pay AGR-related dues of Rs 93,520 crore in 10 years. According to the rules set, it is mandatory to pay 10% of the amount by March 31, 2021. The remaining amount is to be paid in annual installments from April 1, 2021 to March 31, 2031. The court had also said that AGR dues is final. No re-assessment or dispute will be raised in these.
What can change now?
If the government reconsiders Vodafone Idea’s request, the company’s dues may reduce, the financial burden will reduce and investor confidence will increase. Its direct benefit can be seen in the company’s operational improvements and share price.