Vi shares crash!! Big blow for telcos as SC rejects AGR re-computation plea;

The curative petitions by Indian telcos, which are usually decided by judges in the chamber and mostly rejected, were listed before a bench comprising chief justice DY Chandrachud and Justices Sanjiv Khanna and BR Gavai.

Vi shares slumped almost 10 per cent, trading at Rs 11.61 as of 11.45 AM after opening at Rs 13 on Thursday. Shares of the struggling telco had hit day’s low of Rs 10.33 today. It fell below the FPO price of Rs 11.

Airtel and Vi had, last year, requested the Supreme Court to hear in the “open court” their curative petitions against an earlier order, which rejected the pleas for rectification of what they called arithmetical errors in DoT’s calculation of AGR dues.

The telecom operators in their separate curative pleas said they were not challenging the imposition of licence fee on the heads as defined by the apex court, but are seeking to set aside the October 2019 judgment to the limited extent of “imposing penalty and interest on penalty”
They have also sought to “allow correction of manifest/clerical and arithmetical errors” in the provisional demands raised by the Department of Telecommunications.

Also Read: Vodafone Idea shares crash 15% as SC rejects AGR plea

The AGR dues case

These curative petitions arise out of a top court order on September 1, 2020, when it said the companies needed to pay their arrears over a 10-year period, after paying 10% of the dues upfront by March 31, 2021.

Thereafter, the deferred payment cycle would run till 2031 with the 10% amount to be paid by March 31 every year. The SC had then said no revaluation of AGR dues would be allowed and any default would invite interest and penalty, along with contempt of court charges.
Of the total Rs 1.47 lakh crore of AGR dues which the telecom operators were required to pay by January 2020 as a result of the apex court’s order, nearly 75% comprised interest, penalty and interest on penalty, the companies said. The licence fee dues totalled Rs 92,642 crore while the spectrum usage charge was Rs 55,054 crore.

In July 2021, the Supreme Court had dismissed a plea seeking correction of errors in the demand of AGR dues. The telecom companies had then moved the issue tothe top court claiming there were several errors in arriving at the AGR dues which totalled over Rs 1 lakh crore.

Blow to Vi

For Vi, in 2019, the Supreme Court confirmed the AGR demand raised by the Department of Telecom which translated into a burden of Rs 58,000 crore. With the interest levy, that burden has now gone up to Rs 70,320 crore as of the end of FY24.

Vodafone Idea’s curative plea in the AGR case had sought three key remedies: correction of any errors in the AGR demand calculations; a reduction of the penalty to 50 per cent of the total shortfall amount; and an adjustment of the interest rate on the penalty to 2 per cent above the State Bank of India’s (SBI) prime lending rate.

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