In a significant relief to the cash-strapped telecom operator, Vodafone Idea announced on Friday that the Department of Telecommunications (DoT) has officially frozen its adjusted gross revenue (AGR) dues. The freeze applies to all dues up to the financial year 2019, effectively capping the company's principal, interest, and penalty liabilities at that point.
Payment Timeline and Financial Relief
With the freeze in place, Vodafone Idea's annual financial commitment towards clearing these AGR dues has been structured. The company will pay a maximum of ₹744 crore over a six-year span from March 2026 to March 2031. This translates to an annual outgo of up to ₹124 crore during this period.
In a filing to the stock exchanges, the telco provided further clarity on the extended payment schedule. Following the initial six-year period, Vodafone Idea will have to pay ₹100 crore every year for four years, from March 2032 to March 2035. The remaining balance of the frozen AGR dues is then scheduled to be settled in equal annual installments over the final six years, from March 2036 to March 2041.
Market Reaction and Government's Role
The market welcomed the news with optimism. Shares of Vodafone Idea jumped 7.8% to reach ₹12.4 on the National Stock Exchange during early trading hours. This decision follows the Union Cabinet's move on December 31 to provide a crucial breathing space to the telecom operator by freezing its massive ₹87,695 crore AGR dues up to FY19.
The government, which now holds nearly a 49% stake in Vodafone Idea after converting past dues into equity, approved this staggered payment plan. The official communication stated that a committee will be constituted by the DoT to reassess the final AGR dues, and its decision will be binding.
Reassessment Process and Future Challenges
The reassessment of the ₹87,695 crore dues is a critical next step. According to reports, the DoT will undertake a detailed, circle-by-circle review, which is expected to take four to five months. This process will examine the historical data of subsidiaries that existed before the Vodafone-Idea merger and the various licenses held.
Officials familiar with the matter indicated that the final AGR liability is likely to reduce after this recalculation. The DoT will seek detailed information from the company to resolve any discrepancies, and a government committee will determine the final, binding amount.
However, analysts caution that challenges remain. Brokerage firm Emkay Global, in a note dated January 1, maintained a 'sell' rating on the stock. They highlighted that while the AGR timeline offers relief, Vodafone Idea still faces spectrum payment obligations of about ₹1.17 trillion, with significant repayments due between FY26 and FY44.
The brokerage pointed out that the company's current EBITDA is insufficient to meet both capital expenditure and spectrum debt repayments, indicating a continued need for additional funding or relief measures. This development stems from a Supreme Court ruling in October that permitted the government to reassess and recalculate AGR dues up to FY17.
