In setback for Vi, DoT drops AGR waiver plan

A Department of Telecommunications (DoT) proposal to waive the adjusted gross revenue (AGR) dues of telcos has been put on hold due to a lack of consensus within the government’s higher echelons, dealing a blow to loss-making Vodafone Idea.

The broader view in government circles is that it would be wrong to provide financial relief to private companies, some of which are profit-making, on an issue that has been settled and decided by the Supreme Court, a person aware of the details told ET.

The person added that the DoT will work on a revised relief plan for the debt-laden sector, given the precarious situation of Vodafone Idea. The telco — with a cash position of Rs 12,090 crore on December 31 — is scheduled to pay Rs 29,100 crore as statutory dues in March 2026 and Rs 43,000 crore from FY27, till FY31, as per analysts at JM Financial.


“The option of taking additional equity in Vodafone Idea or any other relief measure is likely to be considered,” said the person. “In principle, the government agrees that relief has to be given but the current AGR waiver proposal was not right.”

ET had reported January 18 on the waiver plan. This proposed waiving 50% of interest as well as all of the penalties and interest on penalties that make up the bulk of the AGR dues that were levied on telcos like Vodafone Idea and Bharti Airtel after the Supreme Court order of 2019.

The move could have given relief of over Rs 1 lakh crore to telcos, more than half of which would have accrued to Vodafone Idea (Vi). After Vi, Bharti Airtel, India’s second-largest telco, stood to gain the most with over Rs 38,000 crore, which could have raised eyebrows as the company has been doing well financially and has the ability to repay the amount, said another person.

Tata Teleservices would have seen its AGR dues cut by around Rs 14,000 crore. Tata Tele no longer offers retail mobility services, providing only enterprise mobility services.

Reliance Jio was not impacted by the waiver as the company doesn't have any legacy AGR dues.

The DoT’s AGR waiver proposal was an attempt to give some relief to telcos that have exhausted all legal remedies.

The telecom industry, which had been reeling financially due to cut-throat competition since the entry of Reliance Jio in 2016, took a hit when the Supreme Court in October 2019 backed the government’s view and levied Rs 1.47 lakh crore of AGR dues. That comprised Rs 92,642 crore of licence fees and spectrum usage charge (SUC) dues to the tune of Rs 55,054 crore. Nearly 75% of the dues consisted of interest, penalties and interest on penalties.

In its September 2021 bailout plan, the government allowed a four-year moratorium on payment of AGR and other statutory dues. That moratorium ends September 2025 for spectrum dues and March-April 2026 for AGR dues. Thereafter, the deferred payment cycle will start in 2026 and run till 2031 with 10% to be paid by March 31 every year.

The government has already converted Vi’s interest worth Rs 16,000 crore into a 33% stake. After a recent equity fundraise of Rs 24,000 crore and capital infusion by the Vodafone Group, the government stake stands at 22.56%, with Vodafone Group Plc holding 24.39% and the Aditya Birla Group (ABG) just over 14%. The government may take additional stakes in the company if other measures fail to take shape, said person cited.

Vi has said that it hopes to meet any potential cash shortfall on its AGR payments via another round of debt-to-equity conversion by the government. It had written to the government seeking relief on the interest and penalty aspects of AGR.