Centre weighs interest-free AGR moratorium for Vodafone Idea; dues reassessment may halve payout

The government is reportedly considering offering Vodafone Idea (Vi) an interest-free moratorium of four to five years on more than ₹83,000 crore of its pending adjusted gross revenue (AGR)-linked statutory dues, a move that could provide significant near-term relief to the debt-laden telecom operator.

According to an ET report, once the moratorium period ends, Vi would be required to clear the arrears in six instalments. However, the final payable amount is expected to be substantially lower, potentially nearly half of the current outstanding, following a reassessment of liabilities.

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A committee, likely headed by a secretary-level official, either serving or retired, will reportedly be constituted to hear representations from both the Department of Telecommunications (DoT) and Vodafone Idea. Based on these deliberations, the panel will determine the final amount payable by the company. The proposal is expected to be announced in the coming weeks, subject to Cabinet approval.

Under the existing repayment schedule, Vi is required to pay over ₹18,000 crore in March next year as the first instalment after the moratorium granted to telecom operators in 2021 expires. That earlier relief was not interest-free, leading to a steady increase in the outstanding dues. Industry experts note that Vi and rival Bharti Airtel currently incur 29–30% annual compound interest on their AGR liabilities.

The dues stem from a 2019 Supreme Court ruling that upheld the DoT’s interpretation of AGR, requiring telecom companies to pay licence fees and spectrum charges on revenues that include non-telecom income.

Under the proposed relief package, Vi’s outstanding AGR amount would be frozen, with no further interest accrual. The benefit is expected to be exclusive to Vodafone Idea, with Bharti Airtel continuing to pay its instalments as scheduled.

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Vodafone Idea has repeatedly flagged its inability to service the AGR dues and has sought government support. The Centre is currently the largest shareholder in the company, holding a 48.99% stake after converting a portion of past dues into equity. Last month, the Supreme Court also permitted the government to design a special relief package for Vi covering its entire AGR liability.

Resolution of the AGR issue could pave the way for Vi to raise fresh capital, including its proposed ₹25,000 crore fundraise. A successful equity infusion would dilute the government’s stake, while also giving the Centre flexibility to convert additional dues into equity if required.

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At present, the Aditya Birla Group and Vodafone Group Plc hold 9.50% and 16.07% stakes in the telecom operator, respectively. Earlier reports indicated that New York-based private equity firm Tillman Global Holdings was in talks to invest $4–6 billion (₹35,000–52,800 crore) in Vi and potentially take operational control, contingent on the company securing regulatory and financial relief.