Telecom relief: Vi to pay Rs 1,144 crore over next 10 years for frozen Rs 87,695 crore AGR dues; bulk repayments start March 2036

Vodafone Idea (Vi) will pay the government Rs 1,144 crore over the next 10 years, with the remaining adjusted gross revenue (AGR) dues — frozen at Rs 87,695 crore — to be paid in instalments starting March 2036, the company said on Friday, reported PTI.

The Union Cabinet has frozen Vi’s AGR dues at Rs 87,695 crore, with repayments to begin from FY2031-32 and continue until FY2040-41. In addition, the government has granted the telco six years, from FY2025-26 to FY2030-31, to clear AGR dues pertaining to 2017-18 and 2018-19 without any change.

Vi said the entire AGR liability — comprising principal, interest, penalty and interest on penalty for the period from 2006-07 to 2018-19 as of December 31 — will be frozen and repaid in tranches.

“Maximum Rs 124 crore to be paid annually over next six years i.e. March 2026 to March 2031; Rs 100 crore to be paid annually over four years i.e. March 2032 to March 2035; the remaining AGR dues, has to be paid in equal instalments annually over six years, i.e. March 2036 to March 2041,” the company said in a regulatory filing.

The relief provides a fresh lease of life to the debt-laden operator, which would otherwise have had to pay around Rs 18,000 crore by March 2026 and a similar amount every year for the next six years without government support.

Earlier, Vi had informed the Department of Telecommunications (DoT) that its total liabilities to the government were about Rs 2 lakh crore, including Rs 1.19 lakh crore towards spectrum dues. The company said that without support, the Centre would face significant losses, including no recovery of spectrum dues, erosion of equity value worth Rs 53,083 crore, and no recovery of AGR dues.

Vi’s annual liabilities were more than double its operational cash generation, which has ranged between Rs 8,400 crore and Rs 9,200 crore over the last three years.

The company also said a DoT-appointed committee will reassess the AGR dues, with its decision to be final. “Thereafter, the reassessed amount is to be repaid between March 2036 and March 2041 in equal annual instalments,” the filing said.

Analysts said the relief could ease funding pressures. A Citi report said the move could “fast-track the completion of Vi’s Rs 250 billion (Rs 25,000 crore) bank debt raise” and potentially pave the way for another equity raise, while improving confidence in the company’s ability to continue as a going concern and revive network investments.

Ambit Capital said decisive government action and possible upside from reassessment would help Vi raise bank funding needed for survival capex. It added that a favourable Supreme Court verdict had already enabled Vi to raise Rs 3,300 crore through non-convertible debentures recently.