Fri Sep 20 10:32:52 UTC 2024: ## Vodafone Idea Faces Financial Crisis After Supreme Court Rejects AGR Pleas

**Mumbai, September 20, 2024:** Vodafone Idea (Vi) shares plummeted on Thursday after the Supreme Court dismissed the telecom company’s petitions seeking correction of alleged errors in the adjusted gross revenue (AGR) calculation. The decision has sparked concerns over Vi’s ability to stay afloat, as the company faces a hefty $4-5 billion annual spectrum and AGR payment obligation to the government starting in the second half of 2025.

Analysts warn that Vi will face a financial crisis if it cannot secure concessions on the AGR payments. “It would take at least 25-30 years for Vi to organically pay back its obligations,” Macquarie Research states. “In our base case, we continue to see market-share erosion and meaningful equity dilution risk.”

Despite the bleak outlook, Vi shares closed the day with a slight gain, finishing at ₹10.52 on the NSE and ₹10.48 on the BSE. The stock, however, had hit a 52-week low earlier in the day at ₹9.79.

Analysts remain skeptical of Vi’s ability to retain subscribers and drive ARPU growth. Nuvama observes that Vi is losing market share to BSNL, further impacting its cash flow. Meanwhile, JM Financial believes Vi needs to increase its ARPU to ₹370 in FY27, a significant jump from the current ₹146, to meet its payment obligation.

The Supreme Court’s decision has dealt a blow to the Indian telecom sector. Other telecom companies, including Indus Towers, also saw their shares decline after the ruling. Bharti Airtel, however, ended the day with a slight gain.

Vi’s future remains uncertain, with analysts predicting significant challenges in the coming months. The company must navigate a difficult financial landscape while facing growing competition and the looming threat of market share erosion.

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