Debt Demons Return to Plagued Vodafone Idea

19 Sep 2024 , 03:36 PM

Cash-strapped, debt-ridden, and battling to retain users, Vodafone-Idea appeared to be turning a corner by raising finances, reducing losses, and planning capital expenditure. A gleam of hope had emerged with the assumption that the Supreme Court would grant it relief from a massive amount of money owed to the government in fines and charges.

However, those hopes were dashed when the Supreme Court on Thursday rejected a slew of petitions by telecom companies, including Vodafone Idea, seeking to recalculate the companies’ Adjusted Gross Revenue (AGR), which is used by the government to collect spectrum and licence fees.

Vodafone Idea, the telecom joint venture between the United Kingdom’s Vodafone Plc and India’s Aditya Birla Group, in which the Central government owns a 23.8% share, may now be back at square one. On March 31, 2024, the corporation owed the government Rs 2,03,430 crore. The sum outstanding includes Rs 1,33,110 crore in deferred spectrum payment liabilities as well as an AGR (adjusted gross revenue) debt of Rs 70,320 crore. The corporation had expected the court to grant relief on the final payment of Rs 70,320 crore.

The corporation asked the court for three important remedies. First, any inaccuracies in the AGR demand calculations must be corrected; second, the penalty will be reduced to 50% of the overall deficit amount; and third, an adjustment of the interest rate on the penalty to 2% above the State Bank of India’s prime lending rate.

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