Supreme Court dismisses Vodafone Idea, Airtel, Tata Teleservices plea for AGR interest waiver

New Delhi: The Supreme Court on Monday dismissed pleas by Bharti Airtel, Vodafone Idea, and Tata Teleservices seeking a waiver on interest, penalty, and interest on penalty, collectively amounting to over ₹80,000 crore, on pending adjusted gross revenue (AGR) dues.

A bench comprising Justices J.B. Pardiwala and R. Mahadevan called the petitions “shocking” and “misconceived,” asserting that the relief sought was not legally tenable. “These are writ petitions filed by multinational telecom companies invoking Article 32 of the Constitution. We firmly believe they are misconceived. Dismissed,” Justice Pardiwala said.

The court also rejected senior advocate Mukul Rohatgi’s request to withdraw Vodafone Idea’s petition, opting instead to dismiss it outright. Senior advocate Arvind Datar, appearing for Tata Teleservices, also sought to be made a party in the matter, but the court dismissed Tata’s plea as well.

Read this | Two months after second lifeline, Vodafone Idea again raises survival fears

However, the bench clarified that if the Centre decides to extend relief to the telecom companies, the court would not obstruct such a move. “If the government wants to help you, we are not coming in your way,” Pardiwala said.

Rohatgi, representing Vodafone Idea, emphasized the company’s predicament: “You know, all we are saying is that the government - not government - is today 50% owner in my company. But they said we can’t help because of the judgment, with judgment. 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.

Solicitor General Tushar Mehta, appearing for the Centre, said, “What we have said is that, in view of the judgment of the Lordships, we cannot examine [the relief sought], and it cannot be examined.”

Following the news, shares of Vodafone Idea ended down 8.7% to ₹6.73 on the BSE, while Bharti Airtel ended up 0.2% to ₹1,817.40. Tata Teleservices was down 0.5% at ₹60.35.

AGR dues and financial strain

The four-year moratorium on AGR payments ends in September, intensifying pressure on Vodafone Idea, whose financial position remains precarious amid difficulties in securing bank loans.

Vodafone Idea, which owes ₹83,400 crore in AGR dues, had sought a waiver on ₹45,000 crore comprising interest, penalty, and interest on penalty. Bharti Airtel and its unit Bharti Hexacom sought relief on ₹34,745 crore, out of their total AGR liability of ₹43,980 crore.

“It is humbly submitted that without bank funding, the petitioner company (Vodafone Idea) will not be able to operate beyond FY 2025-26, as it does not have the ability to pay AGR instalment of ₹18,000 crore as per DoT (department of telecommunications) demands due in March 2026,” Vodafone Idea had said in its plea submitted to the Supreme Court on 13 May.

Debt burden and government stake

In March, the government offered Vodafone Idea a second reprieve by converting ₹36,950 crore of statutory dues into equity, raising its stake in the company to 49%.

Vodafone Idea owes about ₹1.19 trillion in spectrum dues in addition to ₹83,400 crore in AGR dues, taking total government dues to over ₹2 trillion as of March end.

When the moratorium expires this year in September, payments will begin from 31 March 2026. Vodafone Idea will have to pay ₹18,000 crore annually for the next six years—a figure that exceeds the company’s annual operational cash generation of ₹8,400 crore to ₹9,200 crore.

Read this | Bharti Airtel seeks equity conversion for ₹40,000 crore government dues

According to analysts, Airtel’s dues would come to around ₹8,400 crore annually in AGR instalments over six years.

Notably, in a similar plea, Airtel also approached the government seeking conversion of its AGR dues worth ₹40,000 crore into equity.

“We just wanted a non-discriminatory level-playing field in terms of an option to convert,” Bharti Airtel vice chairman and managing director Gopal Vittal said in an earnings call with analysts on 14 May. “Whether we will convert or not is a decision for the board to take…We wanted a clarification from the government whether we had the option or not.”

Also read | Why govt’s Vodafone Idea stake will hasten telecom tariff hikes

The AGR issue has been a significant financial strain for the telecom operators. In 2019, the Supreme Court ruled that AGR dues would include non-telecom revenue, leading to a wide gap between the Department of Telecommunications’ (DoT) calculations and the companies’ self-assessments.

For Vodafone Idea, the DoT pegged the dues at ₹58,000 crore, far exceeding the company’s estimate of ₹21,500 crore. For Airtel, the original demand under the AGR case was ₹63,000 crore, including liabilities on acquired spectrum from Tata, Telenor, among others. Tata Teleservices’ AGR demand was ₹16,798 crore.

“With the dismissal of its application, Vodafone Idea is left with no viable options under the current regulatory framework. Its survival now hinges entirely on decisive policy intervention from the government to prevent the telecom sector from slipping into a duopoly,” said Shiju PV, senior partner at IndiaLaw LLP. “Immediate action is crucial to ensure fair competition and safeguard the public interest at large.” 

In September 2024, the Supreme Court rejected curative petitions filed by Vodafone Idea and other operators seeking relief from the 2019 ruling.

“Though the government in the past has intervened by converting VI's (Vodafone Idea) debt into equity, the likelihood of another bailout strategy looks bleak,” said Aditya Bhattacharya, partner at King Stubb & Kasiva, Advocates and Attorneys.

The DoT had earlier considered a proposal to waive 50% of interest and 100% of penalties and interest on penalties, potentially reducing Vodafone Idea’s dues by ₹52,000 crore and Airtel’s by ₹38,000 crore. However, the government did not proceed with this due to possible political backlash, officials said.