Vodafone Idea Shares Surge as AGR Hearing Set for Sept 19

Vodafone Idea Shares Surge as AGR Hearing Set for September 19

Mumbai, Maharashtra - September 16, 2025

Shares of Vodafone Idea (Vi) experienced a significant surge on Monday and continued their upward momentum on Tuesday, following news that the Supreme Court has set a tentative hearing date of September 19, 2025, for the telco's petition concerning additional Adjusted Gross Revenue (AGR) dues. The development has brought a glimmer of hope to the beleaguered telecom operator, which has been grappling with immense financial pressure and a massive debt load. Investors reacted positively to the prospect of a resolution to this long-standing legal and financial issue, driving the stock price up amid heavy trading volumes.

The Backdrop: A History of AGR Dues

The issue of Adjusted Gross Revenue has been a defining and contentious saga in the Indian telecom sector for over a decade. AGR is the usage fee and licensing fee that telecom operators are required to pay to the Department of Telecommunications (DoT). While the telcos argued that AGR should only include revenue from core services, the DoT maintained a broader definition, including revenue from non-core operations like the sale of assets, interest income, and rental income.

The dispute culminated in a landmark Supreme Court ruling in October 2019, which upheld the DoT's definition of AGR. This decision dramatically increased the financial liabilities of telecom companies, with Vodafone Idea and Bharti Airtel being the most severely affected. The Supreme Court, in a subsequent order in September 2020, allowed the telcos a 10-year period to pay their AGR dues, with an initial upfront payment. This was seen as a crucial lifeline for the industry, particularly for Vodafone Idea, which was on the brink of collapse.

The Fresh Dispute and Vodafone Idea's Plea

While the initial AGR issue was seemingly settled, a new point of contention has emerged. The DoT has raised an additional demand of approximately 9,450 crore from Vodafone Idea, claiming these are for dues up to the financial year 2018-19 that were not included in the earlier calculations. The company has vehemently challenged this new demand, arguing that it contravenes the Supreme Court's previous rulings.

Vodafone Idea's petition, filed in the Supreme Court, asserts that the apex court had in its September 1, 2020, order, "crystallised all liabilities" for the period up to the fiscal year 2016-17 and had explicitly prohibited any re-assessment or recalculation of these dues. The company's management believes the DoT's new claim is "unjust, unfair and arbitrary" and seeks to quash it. They argue that the majority of this new demand, about 5,606 crore, is for a period that the court had already settled. This new demand, coming at a time when the company is already struggling to meet its existing obligations and secure fresh funding, adds another layer of complexity to its already precarious financial situation.

The Financial Health of Vodafone Idea

Vodafone Idea, a joint venture between the UK's Vodafone Group and India's Aditya Birla Group, has been fighting a battle for survival against fierce competition from market leaders Reliance Jio and Bharti Airtel. The company's financial metrics paint a grim picture. As of the end of June 2025, the company's net debt stood at over ₹2 lakh crore, with an additional AGR liability of around ₹75,000 crore.

Despite a massive government relief package in 2021, which included the option to defer spectrum payments and a subsequent conversion of dues into equity, Vodafone Idea's financial struggles persist. The government of India has become the single largest shareholder in the company, holding a significant stake after converting outstanding spectrum dues into equity in March and April 2025. This government backing, however, has not been enough to assuage the concerns of lenders, who have been hesitant to provide fresh loans without more clarity on the AGR issue.

The company's performance in the June 2025 quarter showed a net loss of ₹6,608 crore, wider than the loss in the previous year. While revenue from operations saw a modest rise, driven by a 15% increase in average revenue per user (ARPU), it was offset by higher finance costs and government levies.

What the Hearing Means for the Company and the Sector

The upcoming Supreme Court hearing is of paramount importance for Vodafone Idea and could be a pivotal moment for its future. A favorable ruling, which quashes the DoT's additional demand, would provide the company with much-needed financial relief and a clearer path forward. This could, in turn, make it easier for the company to secure the necessary funding from banks and other sources, which it desperately needs for its capital expenditure and 5G network rollout.

The Indian telecom market is a fierce duopoly dominated by Reliance Jio and Bharti Airtel. While Vodafone Idea has launched its 5G services in select cities, its network rollout has been slower than its rivals due to capital constraints. A positive outcome from the AGR case would allow the company to invest more aggressively in network modernization and expansion, which is critical for retaining and growing its subscriber base.

However, a negative verdict would be a major blow, adding to its already insurmountable debt and potentially jeopardizing its survival. The outcome will also be closely watched by the entire telecom industry, as it could set a precedent for how past dues are handled and could influence future financial liabilities.

Broader Implications for the Telecom Sector

The Indian telecom sector has been a key driver of the country's digital growth. With the advent of 5G, the industry is poised for a new era of transformation. However, the financial health of the players, particularly a company as large as Vodafone Idea, is a matter of national concern. A healthy and competitive telecom market is crucial for providing affordable and high-quality services to a vast population. The government's actions, including the 2021 relief package and its support for Vodafone Idea, reflect its commitment to ensuring a three-player market.

The ongoing legal battles and financial stress in the sector highlight the need for a more stable and predictable regulatory environment. The government and the judiciary have a critical role to play in balancing the financial viability of the operators with the need for revenue generation for the state.

As the September 19 hearing approaches, all eyes will be on the Supreme Court. For Vodafone Idea, the decision could be a make-or-break moment. For the Indian telecom sector, it will be another chapter in its ongoing evolution, with the outcome determining the competitive landscape and the pace of future innovation