vodafone idea share
Vodafone Idea investors got a big shock on Thursday when the company’s shares fell more than 12% to ₹8.21 on BSE. This decline came after the Supreme Court’s written order, which almost ended the company’s hopes of relief on Adjusted Gross Revenue (AGR) dues. The hope of legal relief that investors had seen at the beginning of the week now appears to be quite limited.
What did the Supreme Court say?
The Supreme Court, in its October 27 order, had allowed the government to reconsider the AGR dues of Vodafone Idea. At that time the market considered this a big relief for the company. But in the written order sent on Thursday, the court made it clear that this permission applies only to the specific case of Vodafone Idea and this decision is within ‘limited scope’ only. This means that the company can get the additional AGR demand of only Rs 9,450 crore reviewed and not the entire outstanding of Rs 1.6 lakh crore.
No mention of relief on penalty and interest
The biggest hope of the investors was that the court could also give relief in interest, penalty and interest on penalty. This would have reduced the financial burden of the company considerably. But there is no mention of these issues in the written order. It is clear from this that the court’s review is limited only to the disputed additional amount, while no relaxation has been given on the remaining dues. This is the reason why the enthusiasm of the market suddenly cooled down.
Brokerage house response
Brokerage firm IIFL had earlier estimated that the court’s decision gives two major options to the government: either extend the payment deadline beyond March 2031 or waive interest and penalties. But now that the written order has come out, IIFL believes that this relief will be limited to Vodafone Idea only and other companies like Bharti Airtel will not get any benefit from it. After this, shares of Bharti Airtel also fell by about 2% and closed at ₹ 2,062.
Journey from hope to disappointment in the market
After the initial order of the Supreme Court, Vodafone Idea shares had reached a 52-week high of ₹10.52 at the beginning of the week. Investors felt that there could be a big relief in the debts and liabilities of the company. But now when the scope of relief in the written order turned out to be small, the same stock lost almost its entire gain within two days.
What path forward remains for Vi?
The Department of Telecommunications (DoT) had imposed a demand of additional AGR dues of Rs 9,450 crore on Vodafone Idea. The company says that out of this, about Rs 5,600 crore is related to the already fixed period, which does not need to be paid. Now the court has also confirmed that the reconsideration will be limited to this part only. The government, which holds about 49% stake in Vi, will now decide the next step on the matter. The question is whether the government will consider giving relief like interest and penalty or not.