Telecom Stocks Tumble: Vodafone Idea Drops 20%, Indus Towers Falls 10% After SC Rejects AGR Recalculation Plea

In a major blow to the telecom industry, shares of Vodafone Idea and Indus Towers took a sharp dive after the Supreme Court of India rejected telecom operators’ plea for re-computation of Adjusted Gross Revenue (AGR) dues. Vodafone Idea’s stock dropped by 20%, while Indus Towers saw a 10% decline. Bharti Airtel, however, managed to stay relatively stable, with a minor increase of 0.89%.

What is AGR and Why is it Critical?

Adjusted Gross Revenue (AGR) is a key metric that determines the revenue-sharing agreement between telecom operators and the government. It affects the licensing fees and spectrum usage charges that companies owe. The telecom firms have long contested the definition of AGR, arguing that it should include only core telecom revenue, while the Department of Telecommunications (DoT) has maintained it should encompass all revenue, including non-telecom services.

The Legal Battle Over AGR

The Supreme Court’s 2019 verdict in favor of the DoT ended a 14-year legal struggle, imposing massive financial liabilities on telecom companies, with Bharti Airtel and Vodafone Idea owing over ₹90,000 crore combined. Both companies later filed curative petitions, citing calculation errors and arbitrary penalties. However, the court upheld its decision, requiring 10% of the dues to be paid upfront by March 2021, with the remaining amount spread over the next decade.

Market Reaction

Following the latest court decision, Vodafone Idea’s shares were last trading at ₹10.33, down nearly 20%, and Indus Towers at ₹384.80, reflecting a 10% drop. The rejection of the plea has intensified concerns over the financial health of these companies, which are already burdened by heavy debt and shrinking revenues.

The ruling highlights the ongoing financial challenges within India’s telecom sector, particularly for companies like Vodafone Idea that are grappling with significant AGR liabilities.