Major relief to Vodafone Idea, govt freezes Rs 87,695 crore dues, grants five-year moratorium

The Union Cabinet on Wednesday approved a major relief package for Vodafone Idea Ltd (VIL), freezing its outstanding Adjusted Gross Revenue (AGR) dues and granting a five-year moratorium on payments, providing a crucial lifeline to the financially stressed telecom operator.

Sources aware of the decision said the Cabinet, chaired by Prime Minister Narendra Modi, agreed to freeze AGR dues amounting to Rs 87,695 crore. Vodafone Idea will begin repayments from the 2031-32 financial year and clear the liabilities by 2040-41.

AGR dues refer to payments owed by telecom companies to the government based on Adjusted Gross Revenue — a definition that includes not only telecom income but also non-core revenues such as interest, rent and asset sales, on which licence fees and spectrum usage charges are levied.

Sources said AGR dues for the financial years 2017-18 and 2018-19, which were finalised following the Supreme Court’s September 2020 judgment, will continue to be paid between 2025-26 and 2030-31 without any modification.

Vodafone Idea has been grappling with a prolonged financial crisis driven by intense price competition, high debt levels and massive AGR liabilities arising from the expanded definition of AGR.

The company has reported persistent losses, seen a steady erosion in its subscriber base and faced severe constraints in investing in network expansion, even as rivals pushed ahead with large-scale 4G and 5G rollouts.

While there was speculation that the government might waive a portion of the AGR dues, the Cabinet opted instead for a moratorium, allowing the operator time to stabilise operations and improve cash flows.

Sources said the frozen dues will be reassessed by a committee based on audit reports, and its findings will be binding on both the government and the company.

The decision, officials said, was taken to safeguard the government’s interests as it holds a 49 per cent stake in Vodafone Idea, ensure orderly recovery of dues, maintain competition in the telecom sector and protect the interests of nearly 20 crore subscribers.

Previous rounds of government relief, including equity conversion of dues, have helped Vodafone Idea stay afloat, but its long-term survival remains dependent on sustained policy support, fresh capital infusion and a turnaround in operational performance.

With inputs from PTI