By Krishna Dua 
SC Defers Vodafone Idea AGR Hearing to Sept 26 Amid Dues Dispute
On September 19, 2025, the Supreme Court of India issued a procedural yet pivotal adjournment in the long-festering Adjusted Gross Revenue (AGR) dispute involving Vodafone Idea Limited, postponing the hearing on the telecom operator’s curative petition to September 26. This deferral, sought by Solicitor General Tushar Mehta on behalf of the Centre, comes amid a fresh flashpoint: the Department of Telecommunications’ (DoT) demand for an additional ₹9,450 crore in AGR dues, which Vodafone Idea vehemently contests as erroneous and beyond the apex court’s 2019 ruling. Shares of the debt-laden company surged over 10% intraday, closing at ₹8.65 on the NSE—up from ₹7.85—reflecting investor relief at the government’s hinted openness to a “solution,” given its 49% equity stake in the firm.
The AGR saga, a multi-billion-dollar albatross around India’s telecom neck since 1999, stems from ambiguities in revenue-sharing definitions that ballooned liabilities for operators like Vodafone Idea, Bharti Airtel, and Tata Teleservices. For Vodafone Idea—the product of a 2018 merger between Vodafone India and Idea Cellular—the total AGR burden stands at approximately ₹70,000 crore, with the government having converted ₹36,950 crore into equity in 2023 and 2025 tranches. The latest DoT notice, dated July 30, 2025, claims ₹2,774 crore for FY18-19 and ₹5,675 crore for pre-merger Vodafone liabilities up to FY17, inclusive of 8% interest till March 2025. Represented by senior advocate Harish Salve, Vodafone Idea argues these figures duplicate crystallized dues and violate the 2019 verdict’s finality. As CEO Akshaya Moondra warns of operational collapse without relief—the next ₹18,000 crore installment due March 2026—this hearing could determine the survival of India’s third-largest telco amid a duopoly dominated by Reliance Jio and Airtel. This article unravels the deferral’s context, the AGR labyrinth’s twists, Vodafone Idea’s precarious finances, governmental balancing act, and sector-wide tremors.
The AGR Dispute: A Decade-Long Legal Labyrinth
The AGR imbroglio originated in the late 1990s under the National Telecom Policy, mandating operators to share 8-10% of AGR as license fees and 3-5% as spectrum usage charges (SUC) with the DoT. Ambiguities arose over “gross revenue”: Did it encompass non-telecom income like tower rentals, advertising, or interest? Telcos, led by Vodafone and Bharti, argued for exclusions, a stance vindicated by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in 1999 and subsequent high court rulings. By 2014, arrears swelled to ₹1.47 lakh crore across 15 operators, prompting DoT demands.
The flashpoint erupted in 2015 when the Supreme Court admitted writ petitions challenging these assessments. On October 24, 2019, a Constitution Bench headed by Justice Arun Mishra delivered a unanimous verdict: AGR included all revenues bar specific exemptions (e.g., capital receipts), rejecting self-assessments and mandating full payments. Vodafone Idea’s liability crystallized at ₹58,254 crore (DoT figure) versus its ₹21,500 crore estimate—a ₹36,754 crore chasm. The court granted a 10-year moratorium (April 2021-March 2031), allowing 24 quarterly installments with 8% simple interest, but imposed 100% penalties and 15% compounded interest on delays.
Post-judgment chaos ensued: Curative petitions sought waivers, citing calculation errors and equity pleas under Article 14. In March 2020, the court extended the timeline but rejected recalculations. A May 2025 ruling by Chief Justice D.Y. Chandrachud dismissed over ₹80,000 crore waiver bids from Vodafone Idea, Airtel, and Tata Teleservices, emphasizing “finality in litigation” despite financial strain arguments. Undeterred, Vodafone Idea filed its September 8, 2025, petition challenging the DoT’s July notice, seeking quashing of demands up to FY17 (₹5,606 crore crystallized) and FY18-19 revisions, plus a comprehensive reconciliation. The deferral on September 19—before Justice B.V. Nagarathna’s bench—stems from Mehta’s request for time to file a detailed affidavit, but his oral remark—”some solution may be required” given the government’s stake—hints at softening.
The September 19 Hearing: Deferral Amid Hints of Resolution
The September 19 mention, a brief procedural affair, unfolded amid heightened scrutiny. Vodafone Idea’s counsel, Harish Salve, urged expedition, labeling the DoT demand a “reassessment in disguise” that reopens settled FY17 accounts, violating the 2019 order’s scope. Salve highlighted duplications: The ₹9,450 crore includes ₹6,800 crore in SUC up to FY17 (already paid) and post-merger adjustments with interest, arguing it ignores the court’s crystallization directive.
Mehta, representing the Union, countered that the figures emerged from finalized audits unavailable in 2019, not recalculation but “gap reconciliation.” Crucially, he acknowledged changed facts: The government’s 49% equity (via ₹36,950 crore conversions in February 2023 and April 2025) creates a vested interest in Vodafone Idea’s viability. “In larger public interest, some solution is needed, subject to SC approval,” Mehta submitted, echoing Telecom Minister Jyotiraditya’s Scindia’s July CNBC-TV18 comments on “tailored relief” without full PSU conversion. Chief Justice Chandrachud, intervening, stressed “finality,” but listed the matter for September 26 post-Durga Puja recess, allowing Mehta’s affidavit.
The session’s brevity—under 20 minutes—belied its weight. Vodafone Idea’s August 28 DoT response admitted no fresh liability beyond 8% interest on ₹58,254 crore, flagging FY18-19 errors. The deferral buys time for behind-the-scenes talks, potentially averting coercive steps like spectrum revocation under the 2021 reforms package.
Vodafone Idea’s Financial Precipice: Dues as Existential Threat
Vodafone Idea, with 220 million subscribers and 26% market share, teeters on insolvency. Q1 FY26 results (ended June 30) revealed a ₹7,166 crore net loss—widened by forex and interest—revenue at ₹10,879 crore (down 2.3% YoY), and EBITDA at ₹4,752 crore (margin 43.7%). ARPU stagnated at ₹175 post-July 2024 hikes, while subscriber churn hit 1.9 million, ceding ground to Jio (480 million) and Airtel (380 million).
AGR constitutes 35% of its ₹2.02 trillion debt pile, with banks (SBI-led consortium) withholding ₹25,000 crore revival funds pending clarity. CEO Akshaya Moondra, in the June earnings call, warned: “Without bank funding, we cannot operate beyond FY26, unable to pay the March 2026 ₹18,000 crore installment.” The October 2025 FPO—₹18,000 crore at ₹10/share floor—hangs in balance, with AGR overhang deterring anchor investors.
Government equity infusions—₹25,250 crore in 2023, ₹11,700 crore in 2025—diluted promoters (Vodafone Group 45.1%, Aditya Birla 27.9%) but stabilized capex: 5G trials in 17 circles, ₹50,000 crore needed by 2027. Yet, without relief, CIRP under IBC looms, potentially fragmenting assets and inflating tariffs 15-20% (TRAI estimate).
Government’s Dual Role: Creditor and Shareholder Dilemma
The DoT, under Telecom Secretary Neeraj Mittal, defends the demand as fiscal prudence: ₹2 lakh crore total AGR recovery targeted by 2031. The July notice, post-2025 audits, claims shortfalls from unavailable FY18-19 financials, excluding penalties but adding 8% interest. Yet, as 49% stakeholder, the Centre faces a paradox: Aggressive enforcement devalues its investment (market cap ₹72,000 crore), while leniency risks precedents for Airtel’s ₹44,000 crore dues.
Prior interventions signal pragmatism: 2021’s four-year moratorium extension (₹42,000 crore liquidity), 2022 reforms deferring ₹49,000 crore spectrum payments, and equity conversions. Scindia’s “no full PSU” stance in July 2025 hints at options like two-year pauses, smaller installments, or penalty waivers—per CNBC-TV18 reports—balancing consumer interests (3G sunset by 2026) with revenue (₹1.74 lakh crore GST in August).
Supreme Court’s Evolving Stance: Finality vs. Equity
Since 2019, the apex court has been AGR’s reluctant referee. Justice Mishra’s bench prioritized statutory interpretation over equity; CJI Chandrachud’s May 2025 dismissal of ₹80,000 crore waivers invoked Article 14 but upheld finality. Justice Nagarathna’s September 19 nod to Mehta’s “solution” plea—citing changed facts—suggests flexibility, potentially directing DoT audits or amicus curiae. Precedents like 2020’s bank guarantee waivers (₹92,000 crore) favor telcos, but the court may limit to interest tweaks, extending to 2031.
Legal eagles like Justice (Retd.) K. Chandru foresee a “nuanced” September 26 outcome: Stays on demands, no principal cuts.
Sector-Wide Ramifications: Duopoly Deepens?
India’s ₹3 lakh crore telecom market—6% GDP—hangs on AGR resolution. Vodafone Idea’s demise would entrench Jio-Airtel duopoly (70% share), stifling competition and digital inclusion (rural penetration 55%). Airtel, with stronger ₹1.2 lakh crore reserves, echoes pleas but faces less peril; Tata Teleservices’ BSNL pivot adds irony.
Relief like 2021’s deferral injected ₹42,000 crore liquidity; 5G auctions (₹1.5 lakh crore) demand balance. Analysts at Kotak forecast Nifty Telecom dipping 5-7% sans positivity, with Vi’s cap below ₹50,000 crore.
Economic and Policy Horizons: Fiscal Prudence vs. Growth
AGR recovery bolsters exchequer (₹2 lakh crore by 2031), but Vi’s fall risks 15% tariff hikes, per TRAI, and 4 million job losses. Government’s stake incentivizes survival, mirroring BSNL bailouts, but sets federal precedents. Broader reforms—GST 2.0 audits, 6GHz auctions (2026)—hinge on stability.
Outlook: September 26 as Turning Point
September 26 could mandate joint audits by October, interim stays till December. Optimistic: Waiver of ₹9,450 crore, unlocking FPO. Pessimistic: Enforcement, triggering IBC. Vi’s 5G push (1.5 lakh sites) offers hope, but AGR clarity is lifeline.
Conclusion
The Supreme Court’s September 19 deferral to September 26 in Vodafone Idea’s AGR plea encapsulates telecom’s fragile equilibrium—judicial finality clashing with economic imperatives. As DoT’s ₹9,450 crore demand looms, Mehta’s “solution” hint and government’s stake offer respite. With Moondra at helm and Salve in court, the verdict could avert duopoly dystopia. In this high-stakes drama, September 26 isn’t procedural—it’s pivotal for India’s digital pulse