Under the proposed relief, the AGR dues of Vi may come down by over ?52,000 crore; for financially robust Bharti Airtel, by nearly ?38,000 crore; and for Tata Teleservices, by around ?14,000 crore, said a second person. Reliance Jio doesn’t have any legacy AGR dues and is not affected by the proposed measure. Tata Tele no longer offers retail mobility services, only enterprise mobility services.
“The proposal is being discussed at the highest level including the finance ministry, the telecom department and the cabinet secretariat,” said one of the persons aware of the details.
The government is working to announce the measure—the second such substantial relief package for the debt-laden sector since September 2021—in the February 1 budget, said the people cited. This comes on the heels of last month’s relief measure—waiving the requirement for submitting bank guarantees for past spectrum dues, a move that benefitted Vi the most. It will no longer need to submit guarantees worth Rs 24,800 crore, opening up space for lenders to extend debt to the carrier.
The move to provide another relief package underlines the government’s intent of ensuring a competitive sector with three healthy private players, along with state-run Bharat Sanchar Nigam Ltd (BSNL).
The telecom industry, which had been reeling financially due to cutthroat competition since the entry of Reliance Jio in 2016, suffered a body blow when the Supreme Court in October 2019 backed the government’s view and levied Rs 1.47 lakh crore of AGR dues. This comprised Rs 92,642 crore of licence fees and spectrum usage charges (SUC) of Rs 55,054 crore. Nearly 75% of the dues consisted of interest, penalties and interest on penalties.
The last legal move by telcos to challenge the verdict—or some aspects of it—was exhausted when the top court in September 2024 rejected a curative petition seeking a re-computation of the AGR dues. At that time, VI’s AGR dues stood at Rs 70,300 crore while that of Airtel amounted to Rs 36,000 crore.
These dues have since increased due to constant accrual of interest, penalties and interest on penalties. As per industry estimates, the latest AGR dues till March 2025 for Vi could be Rs 80,000-85,000 crore; Rs 42,000-44,000 crore for Bharti; and Rs 17,000- 19,000 crore for Tata Teleservices.
The last legal failure meant the ball was now in the government’s court to offer some relief on the AGR dues front.
The government had in September 2021 given significant relief to the sector by allowing a four-year moratorium on payment of AGR and other statutory dues. The moratorium ends September 2025. Thereafter, the deferred payment cycle will start in 2026 and run till 2031 with 10% to be paid by March 31 every year.
This would have meant that Vi—with a cash position of Rs13,620 on September 30—was scheduled to pay Rs 29,100 crore in March 2026 and subsequently, the annual payouts would surge to Rs 43,000 crore from FY27 till FY31, as per analysts at JM Financial.
As of September 2024, Vodafone Idea had government obligations to the tune of Rs 2.12 lakh crore while debt from banks and financial institutions stood at Rs 3,250 crore.
Under the September package, the government allowed carriers to convert accrued interest on statutory dues into government equity with immediate effect and that on the principal after the end of the moratorium.
While the 2021 relief package applied to all, Vi has availed the measures the most. The government has already converted Vi’s interest worth Rs 16,000 crore into a 33% stake. After a recent equity fund raise 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%.
Vi— which had previously written to the government seeking relief on the interest and penalty aspects of AGR—has said that it hopes to meet any potential cash shortfall via another round of debt-to-equity conversion by the government.
The company, formed after the merger of UK’s Vodafone Group and ABG’s Idea Cellular in August 2018, has been in a precarious financial situation ever since, caught in a spiral of subscriber erosion and declining revenue market share. That’s led to a dwindling cash position, making it unable to invest in expanding its 4G network and rolling out 5G, losing further ground to Jio and Airtel. The joint venture hasn’t posted a profit since it was formed.
So far, the companies have paid around Rs 37,000 crore in AGR dues to the government, following the Supreme Court order. Bharti Airtel has paid about Rs 19,000 crore, followed by Rs 13,500 crore by Vodafone Idea and Rs 4,197 crore by Tata Teleservices. The amount paid by Vi includes the equity conversion by the government.
