The ratings agency had previously accorded a rating of BWR BBB- (Rating Watch with Negative Implications) on the said bonds of Vodafone Idea. The downgrade is attributed to the impact of potential financial risk due to no relief from the Supreme Court (SC) in the adjusted gross revenue (AGR) case.

Earlier this week, India Ratings and Research (Ind-Ra) downgraded its rating on non-convertible debentures of Rs 3,500 crore of the company to IND B/RWN from IND BBB-/ RWN.

Care Ratings (CARE) also downgraded its rating on long term bank facilities and non-convertible debentures of Vodafone Idea to CARE BB- (Credit Watch with negative implications) from CARE BBB- (Credit Watch with Negative implications).

The rating downgrades are on account of significant erosion in the overall risk profile of the company while taking into cognizance of the financial impact of no relief being granted on modification plea on 14 February 2020 of telecom companies seeking new schedule of adjusted gross revenues (AGR) dues by Supreme Court and significant losses to the tune of Rs 6,453 crore in Q3FY20.

The country's apex court on Friday (14 February) rejected the plea by mobile carriers seeking more time to settle AGR dues. SC directed telecom providers to pay their AGR dues to DoT by the next court hearing on 17 March 2020. The court made scathing observations on the conduct of the telecom companies as well as the DoT for ignoring its 24 October verdict that had directed the firm to pay AGR dues to DoT by 23 January 2020.

According to media reports, Vodafone Idea and Bharti Airtel owe Rs 1.47 lakh crore to DoT in AGR dues.

On a consolidated basis, Vodafone Idea reported net loss of Rs 5,807.24 crore in Q3 December 2019 as against net loss of Rs 31,773.48 crore in Q2 September 2019. Net sales rose 2.18% to Rs 11,076.20 crore in Q3 December 2019 over Q2 September 2019, primarily supported by strong 4G additions driving average revenue per user (ARPU) improvement.

Pre-tax loss stood at Rs 6421.40 crore in Q3 December 2019, lower than pre-tax loss of Rs 36959.20 crore in Q2 September 2019 and pre-tax loss of Rs 7004.30 crore in Q3 December 2018.

Vodafone Idea operates as a telecom service provider. The company offers 2G, 3G, and 4G mobile services, as well as mobile payments, advanced enterprise offerings, and entertainment.

Vodafone Idea was currently up 9.31% at Rs 4.58. It traded in the range of Rs 4.23 and Rs 4.71 so far.