The government has put on hold the Department of Telecommunications’ (DoT) proposal to waive adjusted gross revenue (AGR) dues for telecom operators, citing a lack of consensus at the highest levels. This decision deals a setback to Vodafone Idea (Vi), which is struggling under a heavy debt burden, according to an ET Telecom report.
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Relief Proposal Breakdown
The proposal sought to waive 50 percent of interest along with penalties and interest on penalties, offering over Rs 1 lakh crore in relief to telcos. Vi, the biggest beneficiary, stood to gain more than half of this amount, while Bharti Airtel and Tata Teleservices would have received relief of Rs 38,000 crore and Rs 14,000 crore, respectively. Reliance Jio remained unaffected as it has no legacy AGR dues.
"The broader view in government circles is that it would be wrong to provide financial relief to private companies, some of which are profit-making, on an issue that has been settled and decided by the Supreme Court," the report quoted a person aware of the details as saying.
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Major Setback for Vodafone Idea
The person reportedly added that the DoT will work on a revised relief plan for the debt-laden sector, given the precarious situation of Vodafone Idea.
"The option of taking additional equity in Vodafone Idea or any other relief measure is likely to be considered," said the person, according to the report. "In principle, the government agrees that relief has to be given but the current AGR waiver proposal was not right."
Vi — with a cash position of Rs 12,090 crore on December 31 — is scheduled to pay Rs 29,100 crore as statutory dues in March 2026 and Rs 43,000 crore from FY27, till FY31, as per analysts at JM Financial, the report said.
The company (Vi) has requested relief on interest and penalties and is open to another round of debt-to-equity conversion.
The telecom sector has struggled financially since the Supreme Court's 2019 ruling that upheld AGR dues of Rs 1.47 lakh crore, with nearly 75 percent comprising interest and penalties. A four-year moratorium on payments, granted in 2021, ends in 2025 for spectrum dues and in 2026 for AGR dues.
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Government's Stake in Vi
"The government has already converted Vi's interest worth Rs 16,000 crore into a 33 percent stake. After a recent equity fundraise of Rs 24,000 crore and capital infusion by the Vodafone Group, the government stake stands at 22.56 percent, with Vodafone Group Plc holding 24.39 percent and the Aditya Birla Group (ABG) just over 14 percent. The government may take additional stakes in the company if other measures fail to take shape, the person cited in the report said.
Vi has stated that it aims to address any potential cash shortfall in its AGR payments through another round of debt-to-equity conversion by the government. The company has also reached out to the government, requesting relief on the interest and penalty components of AGR.
