Indian telecom operator Vodafone Idea (Vi) has approached the Supreme Court of India challenging the government's refusal to waive over USD 5 billion in interest and penalties on long-standing dues, according to court documents reviewed by Reuters.
To SC: Vodafone Idea Seeks AGR Relief from Supreme Court, Cites Sector-Wide Crisis
No Waiver on Interest and Penalties
The move follows a letter dated April 29 from the Ministry of Communications, rejecting a request from Vodafone Idea CEO Akshaya Moondra to consider a waiver on interest and penalties it owes on USD 9.76 billion in dues, saying the survival of India's third-largest telecom player was at risk, according to the letter, as mentioned in the report.
"The request cannot be considered," the communications ministry wrote, as per the report.
To DoT: Vodafone Idea Says It Can’t Operate Beyond FY 2025–26 as Banks Refuse Loans
Vodafone Idea, a joint venture between UK-based Vodafone Group Plc and India's Aditya Birla Group, owes the government USD 9.76 billion in dues, stemming from a 2019 Supreme Court ruling that widened the definition of adjusted gross revenue (AGR), significantly increasing the liabilities of telecom companies.
Financial Distress and Sectoral Implications
In its petition filed Thursday, Vodafone Idea urged the court to direct the government to act "in public interest," given the "sensitive telecom sector". The plea, not yet made public, argues that without relief, the company would be unable to operate beyond the financial year 2026.
The telecom operator's net debt stood at USD 25 billion as of September 2023, according to brokerage firm CLSA.
According to the report, it is unclear how much relief Vodafone Idea is seeking on the USD 9.76 billion it owes, although the filing states that penalties and interest exceed USD 5 billion.
"No support will lead to a point of no return," Vodafone Idea's Moondra wrote in his April 17 letter, according to the report. The company "will not be able to operate beyond FY26."
He reportedly said that if the current situation is not resolved, it will "create a larger damage to country's reputation and will shake the confidence of global investors".
Although the government has previously converted part of Vodafone Idea's dues into equity, increasing its stake to 49 percent, it has drawn a line at granting any waiver on penalties or interest. The court has repeatedly declined Vodafone Idea's earlier pleas to revise its AGR dues.
Also Read: Bharti Airtel Approaches Supreme Court Seeking AGR Relief: Report
Supreme Court Hearing
While bigger rival Bharti Airtel also faces dues and has challenged them unsuccessfully in court repeatedly, Vodafone Idea's financial health is less secure, the report said.
The Supreme Court is expected to hear Vodafone Idea's latest petition later this week.
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