Indian telecom operator Vodafone Idea announced on Thursday that it has been slapped with a penalty of 6.38 billion rupees (around $71 million) by a goods and services tax (GST) authority for alleged “short payment” of taxes. The order comes just a day after the Indian government granted the debt-laden company a partial moratorium on its adjusted gross revenue (AGR) dues, a move that disappointed investors who had hoped for a full waiver.
Vodafone Idea, jointly owned by India’s Aditya Birla Group and the Vodafone Group, stated that it does not agree with the penalty order and plans to challenge it through legal channels. The penalty adds to the company’s ongoing financial stress, despite the temporary relief provided by the AGR moratorium, which freezes payments totaling $9.76 billion over a five-year period.
The stock market reacted strongly to these developments. Vodafone Idea shares closed 7.8% higher on Thursday, rebounding from an 11% drop on Wednesday following the announcement of the government’s moratorium. Analysts, including those at Emkay, warned that while the moratorium provides temporary relief, it is unlikely to resolve the company’s broader liquidity challenges, highlighting continued uncertainty over the firm’s financial stability and operational sustainability.
