In a significant blow to the telecom sector, the Supreme Court of India has dismissed petitions filed by Vodafone Idea and Bharti Airtel, seeking a waiver on interest, penalties, and interest on penalties related to their Adjusted Gross Revenue (AGR) dues. The ruling, delivered on May 19, 2025, has dashed hopes of financial relief for the struggling telecom operators, who argued that the additional burden threatened their financial stability and long-term viability.
The bench, led by Justice J.B. Pardiwala, deemed the petitions "misconceived," effectively upholding the Department of Telecommunications' (DoT) calculation of AGR dues. This decision follows Vodafone Idea's urgent plea for a waiver of over ₹45,000 crore in AGR-related liabilities to ensure its survival, citing severe financial strain. Bharti Airtel had also requested similar relief, emphasizing the need for equitable treatment within the telecom sector.
Bharti Airtel, along with its unit Bharti Hexacom, specifically sought a waiver of ₹34,745 crore in dues related to interest and penalties. They clarified that they were not challenging the Supreme Court's earlier ruling on AGR from September 1, 2020, which had ordered telecom operators to pay AGR dues totaling about ₹1.43 lakh crore to the DoT, but rather seeking relief from the burden of penalties and interest. The telecom operators argued that unequal treatment by the government would violate Article 14 of the Constitution and undermine the sector's financial stability.
Vodafone Idea had warned of potential collapse without the waiver, stating that it could not meet its annual AGR payments of ₹18,000 crore starting FY26, which is nearly twice its current operational cash generation of ₹9,200 crore. The company, having already paid around ₹8,000 crore, indicated that without relief, it would not be able to continue operations beyond FY26. Vodafone's total AGR liability as of March 31, 2025, was ₹83,400 crore, including ₹28,294 crore in interest, ₹6,012 crore in penalties, and ₹11,151 crore in interest on penalty.
The Supreme Court, however, has consistently upheld the DoT's definition and calculation of AGR dues. In February, it rejected petitions from telecom operators seeking rectification of what they claimed were arithmetical errors. In September 2023, the apex court also dismissed curative petitions challenging the imposition of penalties and interest on penalties.
The government now faces a dilemma, particularly concerning Vodafone Idea's financial crisis. Industry analysts suggest that the government appears to be relying on the Supreme Court to take the final call. The government's four-year moratorium on AGR and spectrum payments, granted in 2021, ends in October 2025. From FY26, Vodafone Idea and Bharti will be required to begin annual payments of ₹18,000-20,000 crore each. Analysts have warned that, in the absence of relief, Vodafone Idea could face a financial crisis in the second half of FY26 or FY27.
The dismissal of the telcos' petitions underscores the ongoing financial challenges facing the Indian telecom sector. With the moratorium ending soon and substantial payments looming, the pressure on these companies is set to intensify, potentially impacting their ability to invest in infrastructure and provide services to consumers. The future remains uncertain, and the government may need to explore alternative solutions to ensure the long-term health and stability of the telecom industry.
