Vodafone Idea shares tank 11% after Supreme Court written order on AGR dues creates uncertainty

Shares of Vodafone Idea Ltd. declined 11% on Thursday, October 30, after the Supreme Court's written order on the telecom company's additional adjusted gross revenue (AGR) plea, sparked a debate.

The Supreme Court on Monday, October 27, allowed the Centre to reconsider Vodafone Idea's AGR dues. On Thursday, the top court's written judgment stated that the order pertains only to Vodafone Idea due to the peculiar facts and circumstances of the case. It also highlighted that the plea restricted its claim only to the additional AGR demand of ₹9,450 crore.

The order does not reference the telecom company's previous plea seeking a waiver of penalty interest and interest on penalty dues, suggesting that the Supreme Court's consideration was confined only to the reassessment of the additional amount.

Centre and Vodafone Idea Should Seek Clarification: IIFL Finance

Reiterating the same, brokerage firm IIFL said the Supreme Court's written order results in ambiguity on whether the flexibility permitted to the Centre is applicable only to Vodafone Idea's additional AGR demand of ₹9,450 crore or on the original AGR liability of ₹80,000 crore.

The brokerage said the way ahead would be for the Centre and Vodafone Idea to seek clarification on the same from the Supreme Court. It said the Vodafone Idea and Indus Towers stocks may witness weakness unless there is clarity on the Supreme Court's order.

Also, the Supreme Court clarified that the order is applicable only to Vodafone Idea, given the peculiar facts and circumstances, and hence, Bharti Airtel is unlikely to get any relief, IIFL stated.

The brokerage said the Supreme Court's order can be interpreted in two ways -- one is that the "SC merely makes a statement of the fact that the petition pertained to additional AGR demand. The government has the flexibility to work on the entire AGR amount. The other interpretation is that SC's grant of flexibility is limited only to the additional AGR demand," it said.

The Supreme Court did not explicitly mention there is flexibility for the Centre for a comprehensive reassessment and reconciliation of all AGR dues, IIFL noted.

"In the absence of a clear directive, we believe that the government may be reluctant to act with complete flexibility, fearing contempt of court proceedings," according to the note.

Vodafone Idea's Stock Price Performance 

Vodafone Idea shares, which crossed ₹10 apiece after the Supreme Court's order on Monday, were trading 11.11% lower at ₹8.32 apiece around 10 am on Thursday. The stock has gained 2.3% in the past month.

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