New Delhi: The Union Cabinet on Wednesday approved a significant relief package for Vodafone Idea, freezing its outstanding adjusted gross revenue dues and granting a five-year moratorium on payments, a move that provides crucial breathing space to the financially strained telecom operator. Sources said the package, cleared by the Cabinet chaired by Narendra Modi, is aimed at protecting government interests, ensuring orderly recovery of statutory dues, maintaining competition in the telecom sector and safeguarding services for nearly 20 crore Vodafone Idea subscribers. The government currently holds about 48.9 per cent equity in the company. Under the decision, Vodafone Idea’s AGR dues amounting to Rs 87,695 crore will be frozen. The company will begin repayments from the 2031-32 financial year, with the full amount to be cleared by 2040-41, according to officials familiar with the matter. These dues will be reassessed by the Department of Telecommunications using deduction verification guidelines issued in 2020 along with audit reports. A government-appointed committee will take a final call on the reassessment, and its decision will be binding on both sides.
AGR refers to the revenue base on which telecom operators pay licence fees and spectrum usage charges to the government. As part of the relief, dues related to the 2017-18 and 2018-19 financial years, which were finalised following a Supreme Court order in September 2020, will remain unchanged. These payments will be spread over the 2025-26 to 2030-31 period. Sources said this translates to around Rs 120 crore annually, or roughly Rs 700 to 800 crore over six years.
Responding to a query from Bombay Stock Exchange, Vodafone Idea said in a regulatory filing that it had not received any formal communication from the government. “As and when there is any development which requires disclosure, we will do the needful,” the company said.
Vodafone Idea has been grappling with financial stress for several years due to intense tariff competition, a heavy debt burden and large AGR liabilities arising from changes in the definition of revenue. The company has posted persistent losses, seen its subscriber base decline and faced constraints in investing in network expansion, even as rivals moved ahead with faster 4G and 5G rollouts.
Although some market participants had expected an outright waiver of AGR dues, the government opted instead for a moratorium on the bulk of the amount, coupled with a reassessment process. Officials said telecom services are a critical infrastructure with strong links to economic growth and employment, and that the sector’s high level of concentration makes the presence of multiple players important for competition and consumer interest.
The decision follows a favourable order from the Supreme Court, which allowed the government to reconsider additional AGR demands for the period up to 2016-17 and undertake a comprehensive reconciliation of dues, including interest and penalties.
Financially, Vodafone Idea reported a loss of Rs 12,132 crore in the first half of the current fiscal, with its net worth at negative Rs 82,460 crore as of September 30. Total debt stood at Rs 2.02 lakh crore at the end of the reported quarter. However, the company has shown signs of improvement, with its consolidated net loss narrowing year on year to Rs 5,524 crore in the September 2025 quarter, helped by lower finance costs and higher average revenue per user following tariff hikes.
Earlier this month, Vodafone Idea said its subsidiary VITIL raised Rs 3,300 crore through non-convertible debentures. The funds will be used to meet payment obligations to the parent company, supporting capital expenditure and business growth.