1. Overview: AGR Dues in Focus Again
Shares of Indian telecom giants Bharti Airtel and Vodafone Idea (Vi) came under pressure on Monday, May 19, after it was revealed that both companies have approached the Supreme Court seeking relief from massive adjusted gross revenue (AGR) dues, particularly interest, penalties, and related charges.
This renewed legal move has re-ignited investor concerns about the financial viability of the telecom sector, especially in light of mounting liabilities that many telcos are still grappling with following the Supreme Court’s 2020 verdict.
2. Bharti Airtel’s Supreme Court Petition Explained
According to a report by The Economic Times, Bharti Airtel and its subsidiary Bharti Hexacom have jointly filed a petition in the Supreme Court seeking waiver of ₹34,745 crore worth of liabilities associated with interest, penalty, and interest on penalty in the AGR dues case.
Airtel clarified that it is not contesting the court’s 2020 judgment that upheld the Department of Telecommunications’ (DoT) definition of AGR. Instead, the company is appealing for relief on humanitarian and equitable grounds, stating that the added burden of penalties and interest has crippled the sector.
Bharti Airtel emphasized that:
“The September 1, 2020 judgment has caused a crippling financial impact across the telecom sector. A relief on equitable basis is crucial for the survival and revival of the sector.”
3. Vodafone Idea’s ₹45,000 Crore Plea and Survival Concerns
Meanwhile, Vodafone Idea (Vi)—already struggling with debt, low subscriber base, and poor financial health—has also submitted a plea for waiver of more than ₹45,000 crore in AGR-related charges.
In a letter dated April 17, 2025, Vi CEO Akshaya Moondra warned the Department of Telecommunications (DoT) that:
“Without Government of India’s timely support on AGR, Vi will not be able to operate beyond FY26. The bank funding discussions will not move forward.”
This marks a critical juncture for Vi, which is hoping to raise funds through banks, but the looming AGR liability is becoming a major deterrent for financial institutions.
Vi has repeatedly urged the government for policy-level intervention, warning that without immediate relief, the company could face a “point of no return”.
4. Market Reaction: Airtel, Vodafone Idea, Bharti Hexacom Shares
The market responded negatively to the developments:
- Vodafone Idea shares dropped sharply by 4.75% in early trade to ₹7.02 apiece on the NSE.
- Bharti Airtel slipped 0.22%, trading at ₹1,356.40.
- Bharti Hexacom, the recently listed subsidiary of Airtel, also witnessed selling pressure, with shares falling 0.62% to ₹1,679.10.
Investors appear worried about the long-drawn litigation, the financial strain due to AGR dues, and potential regulatory ambiguity, all of which continue to cloud sector outlook.
5. AGR Breakdown: Dues and Interest Burden
According to reports, Bharti Airtel and Bharti Hexacom are liable to pay:
- Principal AGR dues: ₹9,235 crore
- Interest: ₹21,850 crore
- Penalty: ₹3,995 crore
- Interest on penalty: ₹8,900 crore
- Total: ₹43,980 crore (approx.)
The waiver plea seeks relief from ₹34,745 crore — the cumulative amount arising from interest and penalties.
Vi’s liability is reportedly higher, exceeding ₹58,000 crore, out of which the company is seeking a waiver of ₹45,000 crore, citing extreme financial distress and the inability to sustain operations without government aid.
6. Telecom Sector’s Long Battle with AGR Liabilities
The AGR issue dates back over 15 years, but it reached a boiling point after the Supreme Court’s 2019 verdict that upheld the government’s broader definition of AGR — which includes non-telecom revenues like rent, dividend, and interest income.
This led to massive backdated dues for nearly all telecom companies. Vodafone Idea and Bharti Airtel emerged as the most affected, with Vi’s very survival now hinging on relief from these obligations.
The government has since provided some measures like payment moratoriums and adjusted payment schedules, but telcos argue that interest and penalty components are excessively punitive and continue to eat into cash flows, hindering investments and 5G rollout.
7. Supreme Court Hearing and What Lies Ahead
Both Bharti Airtel and Vodafone Idea’s petitions are slated for hearing on Monday, May 19, before a Supreme Court bench comprising Justices JB Pardiwala and R Mahadevan.
This hearing is significant for the industry as it could set a precedent for re-evaluation of financial penalties levied under the AGR case. While Bharti Airtel seeks relief on an “equitable basis,” Vi’s plea carries existential stakes, hinging on the government and judiciary for a lifeline.
The Department of Telecommunications (DoT) has yet to officially respond to these fresh pleas, though internal consultations are likely ongoing.
8. Industry Response and Future Implications
Analysts are viewing this legal route as a last-ditch effort by telcos to reduce unsustainable liabilities and redirect cash flows toward infrastructure expansion, particularly 5G and digital services.
Should the Supreme Court grant partial or full relief on interest and penalty components:
- Airtel could regain investment confidence, improve its debt ratios, and accelerate capex plans.
- Vodafone Idea could potentially survive, provided banks resume funding and the company raises capital to stabilize operations.
If denied, the telecom sector consolidation may accelerate, effectively reducing the market to a duopoly—Reliance Jio and Airtel—with Vi facing a potential shutdown or merger.
9. Conclusion
The latest round of petitions from Bharti Airtel and Vodafone Idea has brought the spotlight back on India’s long-standing AGR battle. While Airtel seeks rationalization of dues to maintain financial health and investment capability, Vi has clearly indicated that its very existence depends on judicial and government support.
With the Supreme Court scheduled to hear both pleas on May 19, the outcome will have far-reaching implications for the telecom sector, impacting not just financial markets but also the future of telecom competition, customer services, and 5G infrastructure in India.
Market participants, regulators, and telecom analysts will be closely monitoring the developments in the coming days.
