SC’s AGR verdict to decide Voda Idea’s fate

New Delhi: The Supreme Court on Tuesday will pronounce its order on whether to allow telecom companies staggered payment of adjusted gross revenue (AGR)-related dues. The verdict will decide the survival of Vodafone Idea Ltd, which still owes more than ₹50,000 crore to the Centre in AGR dues and granting the telco time to pay the dues is the only way to save it.

Vodafone Idea sought 15 years to pay its AGR dues, including spectrum usage charge, license fee, interest, penalty, and interest on penalty. However, analysts and legal experts feel that this would only be enough if factors such as higher tariff, reduction in fixed costs, divestments, and fundraising are in the telco’s favour. Anything less than 15 years could threaten the business of the telco.

“Besides a 15-year window, Vodafone Idea’s business needs to make sense. Factors such as shareholders and investors willing to infuse capital, and adequate revenues in the next few years, will have come into play. The fact that Vodafone Idea was confident in the court with 15 years confirms that the management is positive on the business outlook,” said Saurav Kumar, partner at IndusLaw.