AGR Dues Verdict: Bharti Airtel Stock Rallies, Vodafone Idea Tumbles

Shares of Bharti Airtel Ltd. posted their biggest single-day gain since May, while Vodafone Idea Ltd. hit a lower circuit after the Supreme Court granted telecom operators 10 years to pay thousands of crores worth of pending dues.

The Sunil Mittal-led carrier rose as much as 6.6% to Rs 546.9 apiece to become the top gainer on the Nifty 50 Index. Vodafone Idea, however, pared initial gains to drop 20%. Bharti Infratel Ltd.'s stock, too, fell as much as 10.1% before a brief recovery, and is the top laggard on the Nifty 50.

The carriers, however, will have to pay 10% of the statutory dues stemming from the top court's October 2019 verdict that upheld the government's calculations on adjusted gross revenue by March 31, 2021. The chairmen of the telecom companies will have to give undertakings for payments, according to an order by the three-judge panel headed by Justice Arun Mishra. A default on payment installments will invite interest, penalty and contempt of court.

The telecom operators had sought relief after the Supreme Court's October 2019 ruling. The payouts threatened to cripple the wireless carriers that have seen their debt mount and profits tumble after Mukesh Ambani’s Reliance Jio Infocomm Ltd. unleashed a tariff war three years ago. Its cut-rate plans forced bigger rivals to merge and drove others out of business.

Vodafone Idea had sought a 20-year window but was declined by the court. The operator said it was willing to provide security through licence and spectrum for the pending dues. It had then modified its request to 15 years. The company had in December last year warned that it may have to shut operations if the government doesn’t provide relief on the liability it faces on the past statutory dues.