Supreme Court dismisses telcos' plea for AGR waiver, says govt can help
New Delhi, May 19, 2025
Calls petitions by Vi, Airtel, Tata Tele 'misconceived'
The Supreme Court on Monday dismissed the petitions moved by Vodafone Idea (Vi), Bharti Airtel, and Tata Teleservices seeking a waiver on their long-standing adjusted gross revenue (AGR) dues. The telcos were looking for relief related to payment of interest, penalty, and interest on penalty components as part of their AGR dues.
Calling the plea “misconceived’’, a Bench of Justices J B Pardiwala and R Mahadevan said if the Centre decided to extend relief to these companies, the court would not obstruct such a move. “If the government wants to help you, we are not coming in the way,” Pardiwala said.
Experts believe the latest ruling could have severe implications for the already struggling Vodafone Idea (Vi). The telco had recently said it would not be able to survive beyond FY26 without relief. It could even be staring at insolvency, analysts suggested. Referring to the court observation on government help, officials at the Department of Telecommunications (DoT) pointed out that it was unlikely for the government to pick up any more stake in Vi.
The Bench said it was ‘really shocked’ by the petitions. “Really disturbed. It is not expected of a multinational company. We will dismiss it,” the Bench observed.
Set to be the most impacted, Vi told the court through senior advocate Mukul Rohatgi that the Centre can’t bail out the company owing to previous Supreme Court judgements. “You know, all we are saying is that the government is today 50 per cent owner in my company. But they said we can’t help because of the judgement. Their answer is not in the sense that ‘we won’t look at your representation,’ but because of the judgment of the Supreme Court,” Rohatgi told the Bench.
“What we have said is that, in view of the judgment of the Lordships, we cannot examine (the relief sought),” said solicitor general Tushar Mehta, who appeared for the Centre. On their part, DoT officials indicated that the government is not keen on expanding its stake beyond the current level as any further stake would effectively turn the telco into a public sector unit.
Vi has so far sought relief from DoT in multiple forms, including requesting it to recalculate the AGR, another DoT official said. “But existing judgements have settled the issue,” he said. Most recently, DoT rejected the telco’s plea in an April 29 letter stating that further concessions on AGR liabilities cannot be considered due to the Supreme Court’s verdict of 2020.
Vi had earlier this month converted its outstanding spectrum auction dues worth ₹36,950 crore into equity shares for the government. As a result, the Centre’s shareholding in the telco increased to 48.9 per cent, up from 22.6 per cent. Earlier in May, Vi amended the shareholders’ agreement to lower the qualifying threshold for promoter groups — Aditya Birla Group and UK-based Vodafone — to keep governance and management rights with them.
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The apex court had in February rejected a series of review petitions from telecom operators challenging its 2021 decision. In 2021, the court had upheld the DoT's calculation of AGR dues and disallowed any rectification of alleged arithmetical errors.
‘’The court’s dismissal of these petitions reinforces its consistent position since 2019 that telecom companies must pay their dues in full, including penalties and interest. With legal avenues exhausted, Vodafone Idea faces the most precarious position, while Bharti Airtel appears better equipped to weather the financial storm. The government, now holding a 49 per cent stake in Vodafone Idea through previous relief measures, faces the challenge of maintaining a competitive telecom sector while respecting court rulings,” said Parth Contractor, managing partner of Chambers of Parth Contractor.
For Vi, survival likely depends on a combination of significant tariff increases, potential additional government intervention, successful implementation of network investments, and possibly additional equity infusion, Contractor added.
“As of now, the options for the telcos seem to be limited to compliance with the directions of the court. Given their financial condition compounded by the stock market fluctuation, it is anticipated that the ultimate brunt may trickle down to the end consumer in some manner or the other,’’ Shiv Sapra, partner of law firm Kochhar & Co, said. ‘’Of course, things could be different if the equity proposals by the telcos were to be accepted by the Telecom Department, or a bailout was to be offered,” he said.
[The Business Standard]
