AGR dues: Vodafone Idea unlikely to get further relief or payment extension

The government is not keen on giving further relief to Vodafone Idea (Vi) in the form of relaxed or extended payment schedule for the adjusted gross revenue (AGR) amount due from FY26 onwards, according to officials.

 

While discussions with the country’s third-largest telecom player are ongoing, giving further financial leeway is becoming increasingly difficult, an official at the Department of Telecommunications (DoT) said. To be specific, the government is not willing to convert more dues into equity and cannot reduce the ₹84,000 crore AGR amount owed by the company.

 

“The government has already taken equity. The idea was to give the company enough time to get back on its feet during the moratorium period. It’s been four years since, but there hasn’t been any expected outcome,” the official said.

 

Any further extension in payment terms would require a policy-level change, which would make the options available to all operators, another official said.   

 

Bharti Airtel, for instance, has already sought the same conversion of dues to equity as Vi. 

 

“There may be some payment terms being proposed (by the company), but the question remains whether they’ll be able to honour those payments,” the official added.

 

Queries to Vi and Bharti Airtel on whether the government has given any assurance on AGR dues or payment terms did not elicit a response until press time on Sunday. Queries to the DoT seeking responses also went unanswered.

 

Last week, Vi had said it had not received any word from the government on further financial relief. This followed reports suggesting that the government was considering ways to provide relief on the outstanding AGR dues, either by extending the tenure to 20 years from the current six, or by allowing partial payments until a broader decision on the matter is taken.

 

“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,” Vi had said in a statement to the BSE on June 25.

 

During the company’s latest earnings call on June 2, Chief Executive Officer Akshaya Moondra had said Vi was still “engaged with the government” in seeking relief following the Supreme Court’s decision in May, which dismissed a review petition by Vi, Airtel, and others, on waiving part of the AGR dues. “Post the judgment, we continue with our engagement with the government to find a solution to the AGR matter,” he had said.

 

In an interview on June 4, Telecom Minister Jyotiraditya Scindia had told Business Standard that the government did not intend to increase its equity holding in Vi, but did not divulge whether it was thinking of any other form of relief.

 

Vi had earlier opted to convert interest on AGR and spectrum dues bought in auctions before 2021, totalling ₹36,950 crore, into equity as part of the government’s telecom reforms package. This made the government the single largest shareholder, with a 49 per cent stake in the company. 

 

According to the terms, Vi has to start making annual payments starting in March 2026 through to March 2031. The first payment will be a little over ₹18,000 crore, far higher than its current cash flows, even as it continues to post losses.

 

However, the Aditya Birla Group-backed company continues to face challenges securing loans of around ₹35,000 crore, which was part of its ₹50,000–₹55,000 crore capital expenditure plan spanning five years. The plan was outlined in 2024 when it raised ₹20,000 crore through the country’s largest follow-on public offer (FPO).

 

“Generally, our partial discussions with banks showed that they needed more clarity on the AGR issue. Conversion, of course, has been a big step forward. So, I would say that banks would want some clarity on the AGR dues. While that is happening, it is not preventing the discussions to go forward,” Moondra said last month following the company’s Q4 results. At the time, Vodafone Idea’s board had also approved raising ₹20,000 crore in one or more tranches, either by way of further public offerings or private placements, including qualified institutional placements.

 

Promoters of Aditya Birla Group and Vodafone Group, which together hold 25.6 per cent stake, had put in nearly ₹4,000 crore as equity through preferential shares last year, prior to the 2024 FPO.