Indian Government Approves Relief Package for Vodafone Idea Telecom

The Indian government has announced a relief package for Vodafone Idea, a struggling telecom operator, by freezing its outstanding adjusted gross revenue (AGR) dues and providing a five-year moratorium on payments. This move is deemed essential for stabilising the financially troubled company, which has been grappling with significant debt. According to sources cited by Press Trust of India, the Union Cabinet's decision aims to protect government interests, as it holds a 48.9% stake in Vodafone Idea, while also ensuring that the company can orderly repay its statutory dues. Furthermore, the measures are expected to maintain competition within the telecom sector and safeguard services for approximately 200 million subscribers of Vodafone Idea. Under the approved plan, Vodafone Idea's AGR dues have been frozen at ₹87,695 crore. The company is set to commence repayments in the financial year 2031-32, with the obligation scheduled to be fully settled by 2040-41, as per information from sources familiar with the matter. The frozen dues will be subject to reassessment by the Department of Telecommunications, which will consider verification guidelines established in 2020 and relevant audit reports. A committee appointed by the government will make the final determination on the amount owed, which will be binding for both parties. AGR dues consist of payments that telecom operators owe to the government, calculated based on adjusted gross revenue, which includes fees for licensing and spectrum usage. However, the dues for the financial years 2017-18 and 2018-19, which were finalised following a Supreme Court ruling in September 2020, will remain unchanged. These amounts are expected to be settled between 2025-26 and 2030-31, without any possibility for revision. Estimates suggest that approximately ₹120 crore will be paid annually over this six-year period. Vodafone Idea responded to a query from the Bombay Stock Exchange, stating, "We have not received any communication from the government in relation to the above-reported matter. As and when there is any development which requires disclosure, we will do the needful." The company has been facing a prolonged financial crisis characterised by fierce competition, high debt levels, and substantial AGR liabilities stemming from changes in the definition of adjusted gross revenue. Despite receiving previous government assistance and equity conversions of dues, its long-term sustainability is reliant on ongoing policy support, additional capital investment, and improvements in operational performance. Market analysts had anticipated a potential outright waiver of part of the AGR dues; however, the government's decision to implement a moratorium on most liabilities, combined with a reassessment process, allows Vodafone Idea the necessary time to stabilise its operations. Telecom is viewed as a critical infrastructure sector with strong ties to economic growth and employment. The government remains committed to ensuring financial stability and maintaining competition for the benefit of consumers, according to sources from Press Trust of India. This announcement follows a recent Supreme Court ruling that allows the government to re-evaluate the additional AGR demands raised for the fiscal period up to 2016-17 and to conduct a comprehensive reassessment of all AGR dues, including associated interest and penalties. Vodafone Idea recorded a loss of ₹12,132 crore in the first half of the current fiscal year, with a negative net worth of ₹82,460 crore as of 30 September. The total debt of the company stood at ₹2.02 lakh crore at the end of the reported quarter. Nevertheless, the company has shown some signs of improvement, with its consolidated net loss narrowing year-on-year to ₹5,524 crore in the quarter ending September 2025, aided by lower finance costs and an increase in average revenue per user following tariff hikes. Earlier this month, Vodafone Idea announced that its subsidiary, VITIL, raised ₹3,300 crore through non-convertible debentures, with the proceeds intended to meet payment obligations to the parent company and to support capital expenditures and business growth.