Vodafone Idea (Vi) shares experienced a sharp decline, sinking 5% on the stock market, following a closer examination of the Supreme Court's recent order regarding Adjusted Gross Revenue (AGR) dues. While the initial reaction to the court's decision was positive, with shares surging as much as 11.4%, a more nuanced understanding of the order's implications has sparked fresh concerns among investors.
The Supreme Court's order, delivered on October 27, 2025, permits the central government to reconsider the additional AGR demand raised against Vodafone Idea for the period up to FY2016-17. The court clarified that this relief is strictly limited to Vodafone Idea, considering the "peculiar facts and circumstances" of the case. These circumstances include the government's 49% equity stake in the company and the potential impact on its large subscriber base of nearly 200 million. The court explicitly stated that its order does not extend to other telecom operators like Bharti Airtel or Tata Teleservices.
The AGR dispute dates back to October 2019 when the Supreme Court upheld the Department of Telecommunications' (DoT) definition of AGR, which included both telecom and non-telecom income. In September 2020, the court allowed telecom operators to clear their AGR dues, amounting to ₹93,520 crore, over 10 years. Vodafone Idea, burdened with around ₹83,400 crore in AGR dues and total government liabilities estimated at nearly ₹2 trillion, has warned that this financial strain threatens its survival.
Vodafone Idea had approached the Supreme Court against the additional AGR demand raised by the DoT for the 2016-2017 period, arguing that the liabilities were already calculated and could not be changed. The company sought a comprehensive reassessment and reconciliation of AGR dues for the period until FY 2016-17, along with a waiver of penalties and interest.
The Supreme Court's decision to allow the government to review Vodafone Idea's AGR dues offers an opportunity for the government to devise a plan for the telecom operator's long-term sustainability. Brokerages believe that this could lead to a partial waiver or payment extension. However, analysts also point out that Vodafone Idea's leverage remains high even without the AGR dues, and the government may need to consider reducing the spectrum debt as well.
Telecom Minister Jyotiraditya Scindia stated that the government is yet to receive the Supreme Court's written order and will study its implications before deciding on any relief measures. He noted that Vodafone Idea would have to formally apply for relief. According to officials, the finer details of the judgment will guide the government's course of action.
Legal experts suggest that the Supreme Court's order could limit the scope of relief to only the additional demands raised by the DoT. However, the order provides the government with the flexibility to take policy decisions that would be in the interest of Vodafone Idea's consumers.
Despite the recent stock decline, some analysts remain positive about Vodafone Idea's prospects. Motilal Oswal Financial Services upgraded the stock from 'Sell' to 'Neutral,' raising its target price to ₹10 per share. Citi also maintained a 'high-risk buy' rating, expecting any relief to come well before Vodafone Idea's next major payment deadline in March 2026. They anticipate that this could pave the way for new credit lines and even an equity raise, potentially reducing the government's stake over time.
