Lifeline for VIL: Govt Freezes AGR Dues, Defers Payment to 2031

New Delhi: In a big relief to debt-ridden Vodafone-Idea (VIL), the Union Cabinet on Wednesday cleared the much-awaited relief package for VIL, freezing its outstanding adjusted gross revenue (AGR) dues of Rs 87,695 crore, and approving a five-year moratorium on payments, which will give a critical lifeline to the struggling telecom operator, according to the government sources.

However, the sources also said that these dues would not have to be paid immediately, rather it would be repaid over a long period of 10 years, starting from the financial year 2031-32 (FY32) and continuing till 2040-41 (FY41). “Besides these outstanding, AGR dues for FY 2017-18 and FY 2018-19, which were finalised based on the Supreme Court order of September 2020, will now have to be paid over 2025-26 to 2030-31 fiscal without any change,” the sources said.

The AGR dues generally refer to payments owed by telecom companies to the government based on AGR and it is the revenue on which telecom operators must pay license fees and spectrum usage charges. It is defined to include all revenues, even non-telecom income like interest, rent, and asset sales. VIL has been battling a prolonged financial crisis, driven by intense price competition, high debt, and massive AGR liabilities that arose from a change in the definition of AGR.

The government has a 49 per cent stake in Vodafone-Idea and is its largest public shareholder. The company has struggled with persistent losses, a shrinking subscriber base, and limited ability to invest in network expansion, even as rivals accelerated 4G and 5G rollouts. “These steps will enable orderly payment of dues to the government and also protect the interest of 20 crore customers of the company,” the government said in a statement.

Repeated rounds of government relief and equity conversion of dues have kept the company afloat, but its long-term viability continues to hinge on sustained policy support, fresh capital infusion, and a turnaround in operating performance. Many had expected that the Cabinet would waive a part, if not all, of the AGR dues. But instead, it decided to give a moratorium, which would allow the company to recover.

As per the sources, a DoT committee will be formed to give relief to the telco by recalculating and revaluating the AGR dues, including considering interest and penalty reversal if any, the government sources said, adding that the committee may reassess the frozen AGR dues based on audit reports. “The dues that have been frozen will be reassessed by a committee based on audit reports,” sources said, adding the outcome shall be binding on both parties.

Meanwhile, VIL reacted over the AGR relief through the Cabinet decision and issued a statement after stock exchanges sought clarification over the media reports, which led to significant volatility in the stock price in the in-traday trading on Wednesday. The telecom major also clarified that it has not received any such communication from the government.