Daijiworld Media Network – New Delhi
New Delhi, Jan 1: The Union Cabinet on Wednesday approved a major relief package for debt-laden telecom operator Vodafone Idea (Vi), freezing its adjusted gross revenue (AGR) dues amounting to Rs 87,695 crore and rescheduling their repayment over a 10-year period, sources said.
The decision follows the Supreme Court’s observations earlier this year allowing the Centre to reconsider Vodafone Idea’s statutory dues in view of public interest and the government’s substantial stake in the company.
Under the approved package, Vodafone Idea’s AGR dues have been frozen as on December 31, 2025, at Rs 87,695 crore. These dues will now be repaid in a staggered manner between financial years 2031–32 and 2040–41. However, AGR dues pertaining to FY18 and FY19 will continue to be paid by the company between FY26 and FY31 without any change.
Earlier, Vodafone Idea was required to start annual AGR payments of around Rs 18,000 crore from March 2026. The company had approached the Supreme Court, warning that without relief, its financial stability would be severely impacted, also putting the government’s equity stake in the telco at risk.
“In October and November, the Supreme Court observed that there shall be no impediment in reconsidering the AGR issue, keeping in view public interest and the substantial stake of the Government of India in Vodafone Idea. In pursuance of these observations, the relief package has been approved,” a senior government official said.
The official added that the move would protect government interests, ensure orderly recovery of dues and help maintain competition in the telecom sector.
As part of the decision, the frozen AGR dues will also be reassessed by the Department of Telecommunications (DoT). A government-appointed committee will examine the reassessment, and its decision will be binding on both the Centre and Vodafone Idea.
Vodafone Idea is currently one of only three private telecom operators in the country, with the government keen to maintain a competitive “three-player” market structure. However, the company’s weak financial position has raised serious concerns about its long-term viability.
“The telecom sector is highly concentrated. In the interest of consumers and competition, the government would like to have multiple players in such a critical sector. The survival of Vodafone Idea as a viable operator is therefore important,” the official said.
In its petition before the Supreme Court earlier this year, Vodafone Idea argued that without regulatory relief, its planned investments would stall and prospects of operational recovery would fade. Including penalties and interest, the company’s total liabilities to the government are estimated at nearly Rs 2 trillion.
With declining revenues, a shrinking subscriber base and heavy debt obligations, Vodafone Idea has struggled to generate sufficient cash flows to meet its statutory dues. The Cabinet’s decision is therefore being seen as a significant boost for the company, which has found it difficult to raise funds amid investor concerns over its massive AGR liabilities.
The Centre also has a direct financial interest in keeping the telco afloat, as it now owns close to 49 per cent stake in Vodafone Idea. This followed the conversion of Rs 36,950 crore of the company’s dues into equity, making the government the single largest shareholder.
This marks the second major lifeline extended to Vodafone Idea. Under the 2021 telecom relief package, the government in February 2023 had approved the conversion of Rs 6,133 crore of interest dues into equity.
As of December 2024, Vodafone Idea’s total debt stood at around Rs 2.3 lakh crore, including approximately Rs 77,000 crore in AGR liabilities and about Rs 1.4 lakh crore in spectrum-related dues, underscoring the scale of the challenge facing the struggling telecom operator.