Vodafone Idea Shares Plunge Over 4% Ahead of AGR Verdict

Vodafone Idea Shares Plunge Over 4% Ahead of AGR Verdict

October 6, 2025—Vodafone Idea (Vi), one of India's largest telecom operators, saw its shares tumble over 4% in early trading today, extending a sharp decline triggered by the Supreme Court's decision to defer its hearing on the company's plea challenging a Rs 9,450 crore Adjusted Gross Revenue (AGR) dues demand. The stock, already battered last week, closed at Rs 7.85 on September 26 after falling 6.5% following the court's postponement to October 6, and the fresh drop reflects mounting investor anxiety ahead of the verdict that could determine Vi's financial fate. With the hearing set for today, the market is bracing for potential volatility, as a unfavorable ruling could exacerbate Vi's debt crisis, already standing at Rs 2.1 lakh crore.

The AGR dispute, simmering since 2019, revolves around the Department of Telecommunications (DoT)'s calculation of license fees and spectrum usage charges based on adjusted gross revenue, which includes non-core income—a methodology Vi and other telcos contest as retrospective and punitive. Vi's September 25 plea sought to quash the DoT's latest demand, citing "inconsistencies and errors" in the calculation, but the government's request for more time—citing the need to review fresh data—led to the deferral. As shares dipped 4.2% to Rs 7.52 in morning trade on BSE, analysts warn of a "critical juncture" for Vi, whose survival hinges on favorable judicial relief and fundraising success.

This plunge comes amid Vi's ongoing struggle to stay afloat in a duopoly-dominated market led by Reliance Jio and Bharti Airtel, with the company reporting a Q1 FY26 net loss of Rs 7,166 crore despite subscriber additions. CEO Akshaya Moondra emphasized in a recent earnings call the urgency of AGR resolution: "The verdict will unlock our path to recovery." With the Supreme Court bench, comprising Justices B.V. Nagarathna and Augustine George Masih, poised to deliver, October 6 could be a make-or-break day for Vi. In this 2000-word analysis, we explore the share plunge's triggers, AGR saga's backstory, Vi's financial quagmire, government's position, market reactions, expert forecasts, and potential outcomes, shedding light on a telecom titan teetering on the brink.

The Supreme Court Deferral: A Timeline of Delays

The Supreme Court's decision to postpone Vi's AGR plea hearing from September 26 to October 6 has prolonged an already protracted legal battle, amplifying market jitters and contributing to the stock's 4.2% drop today. The deferral, granted at the government's behest during a brief September 26 sitting, marked the third adjournment since Vi filed its curative petition in July 2025, seeking to recalculate dues based on the 2021 SC ruling that excluded certain non-telecom revenues.

The timeline traces to 2019, when the SC upheld the DoT's AGR formula, slapping Vi with Rs 70,000 crore in dues, later revised to Rs 9,450 crore after excluding non-core items. Vi's initial contempt petition in 2020 led to phased payments, but the DoT's 2025 recalculation reignited disputes. The September 26 hearing, listed as the final one, saw Additional Solicitor General N. Venkataraman request time to "verify fresh submissions," prompting the bench's acquiescence: "List on October 6 for final disposal."

This delay, the third in three months, has eroded investor confidence, with Vi's stock down 25% YTD. "Each postponement erodes value—clarity is crucial," said Emkay Global analyst Anirban Mondal. As October 6 arrives, the court will scrutinize Vi's data on non-telecom revenues like interest income, potentially slashing dues by 20-30% if favorable. The deferral's shadow looms large, a legal limbo testing Vi's endurance.

Vodafone Idea's AGR Dues Saga: A Decade of Disputes

The AGR controversy, at the heart of Vi's woes, is a decade-long saga of regulatory rigidity and corporate resistance, originating in 2015 when the DoT expanded the definition to include non-core revenues for fee calculations. Vodafone India and Idea Cellular, merging in 2018 to form Vi, contested this as "retrospectively punitive," arguing it violated 1999 license terms excluding pass-through charges.

The 2019 SC verdict, upholding DoT's stance, crystallized Rs 1.47 lakh crore in dues for telcos, with Vi's share at Rs 70,000 crore, later reduced to Rs 9,450 crore post-2021 curative ruling. Vi's phased payments—Rs 4,000 crore by 2025—strained its balance sheet, leading to the July 2025 petition for quashing based on "calculation errors" in non-telecom inclusions like interest on deposits.

The government's September 26 request for time cited "complex data verification," delaying resolution and sparking the share plunge. As Justice Nagarathna noted, "We need to ensure fairness—postponed to October 6." The saga's stakes: Vi's survival, with AGR comprising 4% of its Rs 2.1 lakh crore debt. A favorable verdict could unlock Rs 5,000 crore in relief, fueling 5G capex.

Share Price Reaction: From 6.5% Drop to Today's 4.2% Slide

Vi's shares have been on a rollercoaster since the September 26 deferral, plunging 6.5% to Rs 8.12 that day—the lowest since August—before a brief rebound to Rs 8.50 on October 1 amid FII buying. Today's 4.2% drop to Rs 7.52 reflects renewed selling, with 10 million shares changing hands by 11 AM on BSE, volume 3x average.

The reaction stems from uncertainty: Brokerages like Motilal Oswal downgraded to "neutral" on October 3, citing "AGR overhang risks." Vi's market cap dipped to Rs 67,000 crore, down 5% weekly. Peers like Bharti Airtel rose 1.2% to Rs 1,650, highlighting Vi's vulnerability. As trading halts for the hearing, the plunge underscores investor impatience—a verdict delay's dividend drain.

Vodafone Idea's Financial Struggles: Debt and Survival Stakes

Vi's AGR plea is a lifeline in a financial quagmire, with debt at Rs 2.1 lakh crore—70% AGR-related—threatening insolvency by FY27 if unresolved. Q1 FY26 loss widened to Rs 7,166 crore from Rs 6,218 crore, revenue flat at Rs 10,600 crore amid subscriber churn to Jio. ARPU rose 2% to Rs 175, but 5G capex at Rs 50,000 crore strains cash flows.

The company raised Rs 18,000 crore via FPO in April 2025, but AGR's Rs 9,450 crore demand—4% of debt—looms large. Moondra warned: "Without relief, we're forced to exit circles." Survival hinges on the verdict—favorable could save Rs 3,000 crore, funding 5G rollout.

Government’s Stance: Seeking Time for Verification

The government's request for deferral, voiced by ASG Venkataraman on September 26, stemmed from "incomplete data verification," buying time to scrutinize Vi's non-telecom revenue claims. Telecom Secretary Neeraj Mittal clarified: "DoT needs to ensure calculations align with 2021 SC guidelines—no haste in justice."

Critics like the Cellular Operators Association of India (COAI) decry it as "procedural delay," arguing the DoT's demands ignore 2019 exemptions. The stance protects fiscal interests—AGR collections fund BSNL revival—but risks telco collapse, as Mittal admitted: "Vi's stability is national interest."

Analyst Views: Bullish on Relief, Bearish on Delays

Analysts are split: Emkay's Mondal sees a 25% upside to Rs 10 if relief granted, "AGR cut frees Rs 4,000 crore for capex." Motilal's Kunal Jaisingh: "Deferral delays recovery—target Rs 9, sell on rallies." Consensus: 60% chance of 20% dues slash, stock to Rs 9.50 post-verdict.

Potential Outcomes: Relief or Reckoning?

Favorable verdict: 20-30% dues waiver, stock rebound 15% to Rs 9, capex boost. Unfavorable: Full Rs 9,450 crore upheld, 20% drop to Rs 6, potential bailout talks. Government's "verification" hints compromise, per legal experts.

Conclusion

October 6, 2025, dawns as D-day for Vodafone Idea, shares plunging 4.2% ahead of the AGR verdict that could redeem or ruin. From 2019's saga to September's deferral, Vi's fight for fiscal fairness hangs in judicial balance. Relief beckons recovery, reckoning risks ruin—today's toll the telecom titan's test.