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Vodafone Idea tanks 39% on AGR verdict, Airtel shrugs off concerns

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NEW DELHI :
Shares of Vodafone Idea Ltd tanked 39.3% on Friday, a day after the Supreme Court rejected the review petition by Vodafone Idea and Bharti Airtel challenging the apex court’s 24 October order on adjusted gross revenues (AGR).

The stock slumped around 39%, but later recovered to trade 27% lower at Rs4.40. The telecom company’s AGR dues stood at 50,000 crore.

It was a double whammy for the company as its subscriber base nosedived to a record low in November. According to data released by Trai on Thursday, Vodafone Idea, a joint venture between Britain’s Vodafone and billionaire Kumar Mangalam Birla-backed Idea Cellular, lost 36.41 million users in the second last month of 2019, ending with a 29.12% market share or 336.25 million subscribers.

Shrugging off concerns over the AGR issue, shares of Bharti Airtel, which owes 35,586 crore to the department of telecommunications (DoT) rose 3.7% to 491.40 piece. The company added 1.65 million mobile users in November and had a subscriber base of 327.30 million users with a market share of 28.35%.

Mukesh Ambani-led Reliance Jio Infocomm, a wholly owned subsidiary of Reliance Industries Ltd (RIL) rose 2.2% to 1571. The telecom operator owes 60 crore to the DoT in AGR dues

Reliance Jio added 5.6 million mobile subscribers in November, replacing Vodafone Idea as the country’s largest mobile services provider.

Meanwhile, disappointed with the SC verdict, both Airtel and Vodafone are exploring further options, including filing of a curative petition. The 24 October court order upheld the government’s definition of revenue, which defined AGR as all revenues of a licence holder including those from non-core telecom operations such as rent, dividend and interest income, in a 14-year-long case.

Aditya Birla Group chairman Kumar Mangalam Birla in December had said that the group’s telecom unit, Vodafone Idea Ltd, will have to “shut shop” if there was no relief from the government following the Supreme Court ruling.

Airtel and other telecom operators had challenged the way the DoT calculated AGR, based on which they pay licence fees and spectrum charges. Licence and spectrum charges are calculated at 8% and 3-5% of AGR, respectively.

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