Vodafone Idea Limited (VIL), the third-largest telecom operator of India, had a rough Thursday morning in the stock market. The telco's stock dipped more than 10% and is now back up slightly, but is still 6% down from the previous closing price (at the time of writing). The company's shares fell after the Supreme Court (SC) gave a written order on the AGR (adjusted gross revenue) ruling. For the unaware, recently, the SC had said that the government is now allowed to re-examine the AGR dues amount payable by the telco. This had made the markets very happy, and also pushed the telco's stock up.
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However, the written order from the SC gives more clarity on the matter. It paints the real picture of what the SC had said and how it would affect the telco and the sector. Firstly, the re-examining of the AGR dues is only applicable to Vodafone Idea (Vi), no other telcos. Secondly, the AGR dues concerned here is only the additional AGR demand that the government had raised for up to FY2016-17.
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Unless there's a substantial relief, there's not going to be any major benefit to the telco. The SC wants a finality to the matter. This should bring it for the telco. Now the ball is in the court of the government, and what the government decides to do with it something we will have to wait and see.
