Daijiworld Media Network - New Delhi
New Delhi, May 18: In a high-stakes move that could shape the future of India's telecom industry, Vodafone Idea has approached the Supreme Court after the government rejected its plea to waive over $5 billion in interest and penalties on outstanding dues.
The telecom major, a joint venture between UK-based Vodafone Group and India’s Aditya Birla Group, is battling for survival amid mounting financial strain. On April 29, the communications ministry turned down a request from Vodafone Idea CEO Akshaya Moondra, who had warned that the company might not be able to operate beyond FY26 without immediate relief.
"The request cannot be considered," the ministry stated in a letter seen by Reuters, despite acknowledging that Vodafone Idea’s collapse would endanger the competitive landscape of the sector.
The telecom operator has now filed a petition in the Supreme Court, urging it to direct the government to act “in public interest” given the “sensitive” nature of the telecom sector. The filing yet to be made public emphasises that penalties and interest alone account for over $5 billion of the $9.76 billion total dues.
These dues stem from a 2019 Supreme Court ruling that widened the definition of adjusted gross revenue (AGR), leading to massive financial liabilities for telecom players.
While larger rival Bharti Airtel has also faced similar AGR demands, Vodafone Idea’s financial condition is far more precarious. The company’s net debt stood at a staggering $25 billion as of September 2024, according to brokerage firm CLSA.
To offer some relief, the government had previously converted a portion of Vodafone Idea’s dues into equity, raising its stake in the company to 49%. However, the recent denial of the waiver has sparked fears about the operator’s future.
"If the current situation is not resolved, it will shake the confidence of global investors and damage the country’s reputation," Moondra cautioned in his letter dated April 17.
The Supreme Court is expected to hear the plea this week, although it has previously dismissed Vodafone Idea’s requests to review its 2019 order.
With its survival hanging by a thread, the outcome of the case could determine the fate of India’s third-largest telecom company.