CourtKutchehry

Supreme Court Defers Vodafone Idea’s Plea Against ₹9,450 Crore AGR Demand; Govt Signals Possible Resolution

Telco says most of new demand covers periods already settled; warns survival at stake

Centre seeks time citing 49% stake in Vodafone Idea: next hearing on September 26

By Our Legal Correspondent

New Delhi: September 20, 2025: The Supreme Court on Friday deferred the hearing of Vodafone Idea Ltd’s petition challenging a fresh ₹9,450 crore adjusted gross revenue (AGR) demand from the Department of Telecommunications (DoT), after the Union government sought more time to explore a resolution.

The case will now be heard on September 26, with the Centre indicating that it is open to finding a solution in the interest of consumers, given that it now holds a 49% equity stake in the financially stressed telecom operator.

Background: AGR Dispute and Supreme Court’s 2020 Order

The AGR dispute dates back to October 2019, when the Supreme Court ruled that telecom operators must pay statutory dues calculated on their entire adjusted gross revenue, including non-telecom income.

In March 2020, the Court finalised Vodafone Idea’s AGR dues up to FY2016-17 based on DoT’s calculations, explicitly barring any self-assessment or reassessment by operators. At that time, DoT pegged Vodafone Idea’s dues at ₹58,254 crore, far higher than the company’s self-assessed figure of ₹21,500 crore.

The company’s curative petitions were dismissed in August 2024, and in May 2025, the Court rejected its plea for a waiver of around ₹45,000 crore in interest and penalties on its total AGR liability of ₹83,400 crore.

The Fresh ₹9,450 Crore Demand

Despite the 2020 order, DoT in August 2025 issued a fresh demand for ₹9,450 crore, covering:

₹2,774 crore from the merged Vodafone Idea entity (post-August 2018 merger).
₹6,675 crore from the pre-merger Vodafone Group.

Vodafone Idea argues that ₹5,606 crore of this new demand relates to periods already settled by the Supreme Court’s 2020 ruling, and therefore lacks legal basis.

The company’s petition, filed on September 8, 2025, seeks:

Quashing of DoT’s additional demands for FY17 and earlier.
A comprehensive reassessment and reconciliation of all AGR dues for that period.

Company’s Financial Stress

Vodafone Idea has warned that the additional liability threatens its survival and the livelihoods of over 18,000 employees and thousands more indirectly dependent on the company.

The telco serves about 198 million subscribers and is already committed to paying ₹18,000 crore annually in AGR instalments for the next six years, starting March 2026 — an amount it says far exceeds its annual operational cash generation of ₹8,400–9,200 crore.

Including penalties and interest, Vodafone Idea’s total liabilities to the government are estimated at ₹2 trillion.

Government’s Position

Appearing for the Centre, Solicitor General Tushar Mehta told the bench led by Chief Justice B.R. Gavai, with Justices K. Vinod Chandran and N.V. Anjaria, that since the government is now the largest shareholder, “some solution may have to be found” in the interest of consumers.

The government acquired its 49% stake by converting ₹53,083 crore of Vodafone Idea’s dues into equity in two tranches — in February 2023 and April 2025.

While the Centre has previously ruled out further relief beyond the 2021 telecom support package, its latest stance suggests a willingness to explore options outside prolonged litigation.

DoT’s Justification for the Demand

In a 13 August 2025 letter, DoT said that updated outstanding licence fee dues up to FY19 had not been tabulated in the Supreme Court’s September 1, 2020 order.

It claimed the revised amounts were calculated with interest and penalties up to October 2019, and updated with 8% annual interest through March 2025.

DoT maintains that the additional dues are not a reassessment, but rather a correction of “gaps” in earlier accounting.

Vodafone Idea’s Counter-Arguments

The company disputes DoT’s revised calculations, particularly on:

Licence fees (a percentage of AGR).
Spectrum usage charges.

It claims that if spectrum usage charges up to FY17 are included, the additional dues amount to about ₹6,800 crore as of March 31, 2025 — much of which overlaps with settled periods.

Vodafone Idea has also flagged alleged duplication of amounts in the FY18 and FY19 calculations.

Market Reaction

Following the Supreme Court’s decision to defer the hearing and the government’s conciliatory tone, Vodafone Idea’s stock surged over 7% on the BSE to close at ₹8.41, after hitting an intraday high of ₹8.82.

Bharti Airtel shares also gained modestly, reflecting broader investor optimism about potential regulatory relief in the telecom sector.

Industry Context and Implications

The outcome of this case could have far-reaching implications for India’s telecom industry:

For Vodafone Idea: A favourable ruling or negotiated settlement could provide breathing space to raise funds, invest in network upgrades, and compete with Reliance Jio and Bharti Airtel.
For the Government: Balancing revenue recovery with the need to maintain healthy competition in the telecom market will be key.
For Consumers: The survival of Vodafone Idea is critical to preventing a duopoly, which could impact tariffs and service quality.

Next Steps

The Supreme Court will hear the matter on September 26, 2025. Both sides are expected to present detailed arguments, with the possibility of a negotiated resolution if the government and the company can agree on a reconciled figure.

Until then, the ₹9,450 crore demand remains disputed, and Vodafone Idea’s financial future hangs in the balance.