India is considering a one-time settlement of its longstanding dispute with Vodafone Group Plc's local venture, Vodafone Idea Limited (VIL), over billions of dollars in unpaid telecom fees, as New Delhi seeks to bolster ties with the United Kingdom, according to a Bloomberg report by Alisha Sachdev and Santosh Kumar, citing people familiar with the matter.
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Government Considers AGR Settlement
The government is examining a proposal that could include waiving interest and penalties and offering concessions on the principal amount of the dues, which total nearly Rs 2 trillion (USD 22.5 billion). Officials are drafting the framework for the potential deal while exploring measures to ensure that any relief granted does not trigger legal challenges from other telecom operators facing similar liabilities, the report said, quoting sources.
The arrears have hung over Vodafone Idea Limited, which hasn't reported a quarterly profit since 2016. A settlement would potentially pave the way for India’s third-largest wireless carrier to attract new investors, the people added, as cited in the report.
Financial Lifeline for Vodafone Idea
The resolution of the dispute could provide a crucial lifeline to Vodafone Idea Ltd., which has not reported a quarterly profit since 2016 and continues to grapple with a severe cash crunch. A settlement would also help the company attract new investors, strengthen competition in India's telecom market, and protect the government's own stake — it became a 49 percent shareholder earlier this year following a debt-to-equity swap.
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The development comes as British Prime Minister Keir Starmer is scheduled to visit India this week, adding urgency to the discussions. Both nations recently concluded a free trade agreement, and New Delhi is looking to deepen its partnership with London amid strained relations with Washington following President Donald Trump's return to the White House and ongoing efforts to recalibrate ties with Beijing.
"British Prime Minister Keir Starmer is scheduled to visit India this week, adding urgency to the effort," one of the sources was quoted as saying.
The dispute itself pertains to how India calculates annual adjusted gross revenue (AGR), a share of which is paid as license and spectrum fees. While telecom carriers have challenged the method for years, the court may be more receptive this time if the government shifts its stance, one of the sources was quoted as saying.
Legal Challenges and Regulatory Safeguards
Vodafone Idea and its peers, including Bharti Airtel Ltd. and the Tata Group's former wireless venture, have long contested the government’s methodology.
According to the report, Officials will have to ensure that any relief does not grant Vodafone Idea an unfair advantage. One option under discussion involves requiring all telecom operators to submit revival plans in exchange for concessions, ensuring a level playing field across the sector.
Vodafone Idea has been in urgent need of capital infusion, and any potential deal with a new partner hinges on clarity around the AGR burden, the sources reportedly said.
Also Read: Vodafone Idea AGR Relief to Be Decided by Cabinet; At This Moment, There Is Nothing, Says MoS
If approved, the move would mark the government's most significant intervention in the telecom industry since it assumed a near-majority stake in Vodafone Idea. The Supreme Court is scheduled to hear Vodafone's petition challenging the government's AGR calculations on October 6, a case that could gain new momentum if the government signals a willingness to settle.
