In a significant move that offers a lifeline to the struggling telecom operator, Vodafone Idea (Vi) has secured a major restructuring of its massive Adjusted Gross Revenue (AGR) dues. The Union Cabinet has approved a plan that freezes the total AGR liability and spreads repayments over a much longer period, providing the cash-strapped company with critical breathing room.
Details of the Restructured AGR Payment Plan
The government has formally frozen Vi's total AGR dues at Rs 87,695 crore. This amount includes the principal, interest, penalty, and interest on penalty for the period from 2006-07 to 2018-19, calculated as of December 31. The repayment schedule is now staggered over nearly two decades.
According to the company's regulatory filing, the immediate payment plan is as follows:
- Rs 1,144 crore will be paid over the next ten years.
- A maximum of Rs 124 crore annually will be paid from March 2026 to March 2031.
- Rs 100 crore annually will be paid over four years from March 2032 to March 2035.
- The remaining frozen AGR dues will be repaid in equal annual instalments over six years, from March 2036 to March 2041.
Furthermore, the government has granted Vi a six-year window, from the financial year 2025-26 to 2030-31, to clear AGR dues specifically related to 2017-18 and 2018-19 without any modifications.
A Crucial Lifeline for the Debt-Laden Telco
This relief package is transformative for Vodafone Idea's survival prospects. Without this government intervention, the telco would have faced an unsustainable financial burden. It was previously obligated to pay around Rs 18,000 crore by March 2026 and a similar amount every year for the subsequent six years.
The company had highlighted its precarious position to the Department of Telecommunications (DoT), stating its total government liabilities were approximately Rs 2 lakh crore. This included Rs 1.19 lakh crore in spectrum dues. Vi argued that without support, the government risked significant losses, including no recovery of spectrum dues, erosion of equity value worth Rs 53,083 crore, and a complete write-off of AGR dues.
The relief is essential because Vi's annual liabilities were more than double its operational cash flow, which has ranged between Rs 8,400 crore and Rs 9,200 crore over the past three years.
Implications for Fundraising and Future Operations
Analysts believe this decisive action will ease immense funding pressure on Vodafone Idea and boost investor confidence. A committee appointed by the DoT will reassess the AGR dues, with its decision being final. The reassessed amount will then be repaid between 2036 and 2041.
Financial institutions view this as a positive step. A Citi report suggested the move could "fast-track the completion of Vi's Rs 25,000 crore bank debt raise" and potentially enable another round of equity fundraising. It improves confidence in the company's ability to continue as a going concern and finally revive its long-pending network investments.
Ambit Capital noted that this government action, combined with potential upside from the AGR reassessment, will help Vi secure the bank funding necessary for essential survival capital expenditure (capex). The brokerage also pointed out that a favourable Supreme Court verdict had already allowed Vi to raise Rs 3,300 crore through non-convertible debentures recently, indicating a slowly improving financial pathway.
This restructured AGR plan marks a pivotal chapter for Vodafone Idea, potentially stabilising its operations and ensuring it remains a competitive player in the Indian telecom sector, which is crucial for maintaining a three-private-player market.
