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Vodafone Idea Files Review Petition in AGR Case to 'Correct Arithmetic Errors'

The company lawyers had told the Supreme Court that the firm was making a loss and might go under if this plea was not allowed.

The company lawyers had told the Supreme Court that the firm was making a loss and might go under if this plea was not allowed.

Following the July 23 order, Vodafone Idea saw its former Chairman Kumar Mangalam Birla put in his request to step down from his position on August 4.

Vodafone Idea filed a petition in the Supreme Court seeking a review of the order that was given on July 23, which dismissed the pleas of telcos for the re-computation of adjusted gross revenue (AGR) dues. The telecommunications company has called for the correction of ‘arithmetic errors’ according to a report by CNBC TV18. This comes after the apex court had previously rejected the petitions by telecom companies including Bharati Airtel for the rectification of these alleged errors that were payable by them. The company lawyers had told the Supreme Court that the firm was making a loss and might go under if this plea was not allowed.

Following the July 23 order, Vodafone Idea saw its former Chairman Kumar Mangalam Birla put in his request to step down from his position and distance himself from the telecom company. In his letter, he had attributed this move to the dire financial situation that the company finds itself in as a major contributing reason. It also came after Birla had written to the Cabinet Secretary Rajiv Gauba. In said writing, Birla offered to hand over his Aditya Birla Group’s stake in the company to any government-approved entity that would be willing to take it.

Parallelly, Vodafone Idea has been struggling to raise the funds needed to pay off regulatory dues to the government in the form of licence and spectrum fees. The unpaid dues stand well over Rs 50,000 crore owed to the government. The company had an AGR liability of Rs 58,254 crore. From this amount, the telecom company had paid off 7,854.30 crore, which leaves Rs 50,399.60 crore outstanding in its debt. The company’s gross debt, excluding the lease liabilities, stood at Rs 180,310 crore as of March 31, 2021. This amount can be broken down further into Rs 96,270 crore that takes the form of a deferred spectrum payment obligation and Rs 23,080 crore of debt to banks and other financial institutions. Keep in mind that this excludes the AGR liability amount that is outstanding.

During the proceedings, senior counsel for Vodafone Idea, Mukul Rohatgi argued with the apex court that the AGR figures were not set in stone and that the Supreme Court had the power to correct the alleged ‘arithmetic error’.

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Over the past few years, Vodafone Idea has seen a sharp decline in the customer base following the ceding of market shares to industry giants like Bharti Airtel and Reliance Jio. The company has a deadline to come up with the amount of Rs 22,500 crore between December to April, in order to repay the AGR as well as its spectrum dues. In September 2020, the Supreme Court had made it clear that the dues payable by telecom companies will not be subject to any sort of reassessment. Telecom companies have to pay Rs 93,520 crore of AGR dues to the government over a 10 year period to clear out the debt. However, the companies have to pay 10 per cent of the due amount upfront.

On another note, the company’s share bounced back sharply on August 6 after a four-day decline. The shares went up by over 19 per cent. This came after Chief Executive Officer of Vodafone Idea, Ravinder Takkar, reached out to employees seeking to reassure them, according to a PTI report. The stock jumped 19.53 per cent leaving the price standing at Rs 7.10 on the BSE, said the report.

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first published:August 11, 2021, 11:50 IST