Vodafone Idea Ltd. shares tumbled by nearly 10% on Monday following a major setback in the Supreme Court. The telecom company’s plea seeking a waiver of over $5 billion (approximately ₹41,500 crore) in interest and penalties related to adjusted gross revenue (AGR) dues was dismissed, sparking a sharp sell-off in its stock.
The company—jointly owned by the UK’s Vodafone Group and India’s Aditya Birla Group—had approached the apex court last week, urging it to direct the central government to consider relief in the “public interest” given the critical role the telecom sector plays in national infrastructure. The Supreme Court, however, dismissed the plea, terming it “misconceived.” A fresh hearing on a related petition is anticipated later this week.
The verdict stems from a 2019 Supreme Court ruling that expanded the definition of AGR to include non-core revenues, significantly increasing the liabilities of telecom operators. Vodafone Idea has been under intense financial stress since then. Although the government has converted a portion of the company’s dues into equity—acquiring around 49% stake in the process—the telecom player continues to grapple with mounting losses and high debt levels.
Vodafone Idea Q4 FY24 Financial Performance
For the fourth quarter ended March 2024, Vodafone Idea reported a widening net loss of ₹7,674.6 crore, compared to ₹6,418.9 crore in the same quarter last year. The increase in loss was attributed to rising expenses and flat revenue growth. Notably, finance costs surged by 25.5% year-on-year to ₹6,280.3 crore, up from ₹5,004 crore in Q4 FY23.
For the entire FY24, the company posted a net loss of ₹31,238 crore, a 6.6% increase over the ₹29,301 crore loss recorded in FY23. With weak financials and limited cash flow, the denial of AGR relief adds further pressure on Vodafone Idea’s already precarious position in India’s competitive telecom landscape.
Investor Concerns Mount
Following the court’s decision, Vodafone Idea’s stock experienced heavy trading volumes, reflecting investor apprehension about the company’s long-term viability. The lack of regulatory relief, coupled with persistent financial strain, raises significant concerns about the company’s future operations and its ability to compete against stronger rivals like Reliance Jio and Bharti Airtel.
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This article is for informational purposes only. It does not constitute investment advice. Readers are advised to consult certified financial advisors before making any investment decisions.
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