Vodafone Idea in trouble as India rejects AGR appeal

And it is Vodafone Idea that will suffer the most as a result of the decision.

This case has been rumbling on for the past half decade, since an Indian court effectively slapped the country's telcos with a bill for around US$13 billion – at the exchange rates of the time – made up of licence and spectrum fees.

Vodafone, Bharti Airtel and others contested those adjusted gross revenue (AGR) levies and there have been many ins and outs in the past five years, including a decision to allow deferred payments. The operators still insist that the fees have been calculated incorrectly – and that's what this case was about: mathematical and clerical errors, the telcos claim – but the court was having none of it.

Vodafone Idea shared the court ruling in a stock exchange statement. There's little detail given; the court simply stated that it has examined the relevant documents and found no case, dismissing the telcos' position.

Vodafone Idea passed no comment on the ruling. It simply provided details of the court ruling, as requested by the stock exchange. There has been no comment from Bharti Airtel either, in no small part because it was not required to make a filing; Vodafone Idea's share price fell off a cliff as the news broke, but Airtel's did not.

Cash-strapped Vodafone Idea needed this ruling to go its way a lot more than its rivals did. According to the Economic Times, which cites brokerage CLSA, Vodafone will now face annual spectrum and AGR charges of $4 billion-$5 billion per year, potentially dragging it back into financial crisis by the second half of the 2026 fiscal year.

Bharti Airtel will also have multi-billion-dollar bills to contend with, but it is on a much sounder financial footing than its rival. Vodafone Idea has been flirting with collapse for years and has fallen further and further behind its big rivals as a result; it served just over 18.5% of India's mobile market as of mid-year, according to the latest TRAI data, and it is still losing customers. Meanwhile, Reliance Jio and Bharti Airtel claim markets shares of 41% and 33% respectively.

A recent follow-on public offering (FPO) gave the telco the means to pay for 4G network expansion and 5G deployment, which gave it some hope of keeping pace with the big two. But its plans are pretty restrained; a projected $6 billion spend will see it focus its 5G rollout on major cities and high-population areas, while still ploughing money into getting its 4G infrastructure up to snuff. There will be no major competitive challenge any time soon.

It was always going to be a tough road ahead for Vodafone Idea. And this court ruling potentially puts it back into an uncomfortable place, where market watchers will question its very chances of survival.