09/01/26, AGR Relief to VodafoneIdea

 

Vodafone Idea effectively closed its long-running AGR crisis after the government froze dues at Rs 87,695 crore and repaid in phases, significantly improving the debt-laden telco's ability to raise fresh capital and stabilising its balance sheet.

Vodafone Idea told stock exchanges on January 9 that the Department of Telecommunications (DoT) froze its Adjusted Gross Revenue (AGR) at Rs 87,695 crore as of December 31, 2025 and revised its repayment schedule.

“With this development, the likelihood of Vodafone Idea securing debt funding has increased significantly. More importantly, the narrative around Vodafone Idea is now expected to shift from questions of survival to questions of execution,” Vivekanand S, an analyst at Ambit Capital Research

The relief is expected to ease Vodafone Idea's spectrum-related debt burden and improve its capacity to raise additional borrowings for network investments, potentially putting the company on a more sustainable financial footing.

It is also likely to reduce near-term cash-flow pressure, free up resources for network upgrades and strengthen the company's ability to secure around Rs 30,000 crore in new bank loans it is pursuing.

Separately, Vodafone Idea's management recently met existing lenders to discuss an immediate Rs 5,000-crore loan to support operational expenses, after funding talks with private credit institutions fell through, sources said. The meeting was held in December.

Parag Kar, an independent telecom analyst, said the relief paves the way for attracting fresh investors, which could ease the debt burden and enable the firm to manage borrowing required for capital expenditure.

“For other operators such as Bharti Airtel, Tata and Telenor, the AGR issue remains unresolved unless they secure similar relief from the Supreme Court,” Kar added

Revised schedule

Vodafone Idea told exchanges its AGR dues — comprising principal, interest, penalty and interest on penalty for from FY07 to FY19 — have been frozen at Rs 87,695 crore as of December 31, 2025.

Under the revised schedule, it will pay up to Rs 124 crore annually for six years from March 2026 to March 2031, followed by Rs 100 crore annually for four years from March 2032 to March 2035.

The remaining dues will be paid in equal annual instalments over six years from March 2036 to March 2041.

The DoT will also constitute a committee to reassess Vodafone Idea's AGR dues based on the Deduction Verification Guidelines of February 3, 2020 and audit reports.

The committee's decision will be final and binding on both parties, with any reassessed amount also payable between March 2036 and March 2041.

What next?

Vivekanand said with near-term survival largely addressed, investor focus will now shift to execution. “That assessment will require deeper scrutiny. Vodafone Idea has been losing customers not only as feature phone users migrate to 4G but also within its existing smartphone base. In several key markets such as Mumbai and Delhi, some users have reduced usage on Vodafone Idea's network or adopted secondary SIM cards, partly due to the company's delayed 5G investments,” he said.

Against this backdrop, Vodafone Idea's capital expenditure strategy will be critical in determining whether it can stabilise its subscriber base and compete effectively in India's increasingly data-driven telecom market.

The Supreme Court paved the way for the relief in late 2025, observing that public interest, including the government's stake in the company and the interests of nearly 20 crore subscribers, warranted a reconsideration of the long-pending AGR issue.

The court said the government had the mandate to reconsider the issue, provided it served larger public interest.

Vodafone Idea made a representation to the government seeking relief in line with the Supreme Court's observations.

The Union Cabinet decided to freeze the company's AGR dues and reschedule payments over FY32-FY41.

The government sources said that the measures are aimed at protecting the Centre's 49 percent stake in Vodafone Idea, facilitating the orderly recovery of its dues, maintaining competition in the telecom sector, and safeguarding the interests of the company's nearly 20 crore subscribers.

Report by Mr Danish Khan for Network 18