Fresh relief: Cabinet freezes Vodafone Idea dues at Rs 87.7k crore

NEW DELHI: In a major relief for Vodafone Idea, the Union cabinet on Wednesday decided to freeze the telecom company's adjusted gross revenue (AGR) dues at Dec 31 level of Rs 87,695 crore, with payment rescheduled over 10 years, starting 2031-32.

In addition, the dues frozen at the current level will be reassessed by the telecom department based on Deduction Verification Guidelines and the outcome will be decided by a committee appointed by the Centre and that shall be binding on both parties, said officials. The AGR dues for 2017-18 and 2018-19 that were finalised through a Supreme Court order in Sept 2020 can be paid by the company between 2025-26 and 2030-31, without any change.

The cabinet decision, providing a five-year relief, follows Supreme Court judgments allowing govt to reassess the statutory dues.

The stock market was, however, unimpressed by the latest package with the company's shares closing 11% lower at Rs 10.8 on the Bombay Stock Exchange, recovering 50 paise from the day's low of 10.26.

Given that the decision was not made public, responding to a clarification from the exchanges, Vodafone said it had not received any communication from govt.

This is the latest round of support for the beleaguered telecom company, which was hit hard by the massive fall in tariffs, along with the AGR hit. Also, earlier restructuring by govt has failed to sail smoothly. It is sitting on a pile of debt of over Rs 2 lakh crore, including the AGR dues, with losses adding up to Rs 5,600 crore during the Sept quarter. It has been reporting losses since the year-ended March 2017. As part of earlier bailouts the Centre is now the largest shareholder in Vodafone Idea with a 49% stake. Vodafone Idea has lost market share as the promoters, the Aditya Birla Group and Vodafone, have been seeking to rope in investors.

Despite the relief offered earlier, Vodafone Idea was not in a position to pay Rs 18,000 crore annually, starting March, and had approached the court as well as govt for fresh support. Officials said that the decision was in view of the public interest, substantial stake of govt and the interest of 20 crore mobile consumers. Govt has argued that the telecom sector needs to be competitive with at least three private players, in addition to state-run BSNL.