Telecom stocks today: In a major setback to telecom companies, the Supreme Court of India on Thursday, September 19, rejected the telcos’ plea on re-computation of adjusted gross revenues (AGRs).
It must be noted here that Bharti Airtel and Vodafone Idea had cited arithmetic errors in the computation of AGR demand.
Immediately after the court verdict, shares of Vodafone Idea and Indus Towers nosedived.
Last seen, Vodafone Idea (Vi) was trading nearly 15% lower at ₹10.96 apiece on the NSE. Indus Towers tanked 10% to ₹384.80 on the BSE. Bhart Airtel, on the other hand, was trading 0.89% higher at ₹1,667.40.
What was the case?
Adjusted gross revenue is the basis for revenue sharing between telecom operators and the government. It determines the licensing and spectrum usage fees that operators must pay. The primary contention has been over the definition of AGR.
Telecom companies argued that it should only include core telecom revenues. While the DoT insisted it should encompass all revenue, including from non-telecom services.
In October 2019, the Supreme Court ruled in favour of the Department of Telecommunications (DoT), ending a 14-year legal battle and significantly increasing the financial liabilities of telecom operators. The judgment led to massive dues, with Airtel and Vodafone Idea owing more than ₹90,000 crore combined.
According to a Business Standard report dated August 30, 2024, the judgment severely impacted the telecom companies. Both Vodafone Idea and Bharti Airtel filed curative petitions in September 2020, arguing that the DoT’s calculation of dues was flawed and that the penalties imposed were arbitrary.
The Supreme Court, however, ruled that the dues must be paid over a 10-year period, with 10% upfront by March 2021 and the remainder to be paid annually until 2031.
