Vodafone Idea’s long struggle for relief in the Adjusted Gross Revenue (AGR) dues case appears to have gained new momentum after the Supreme Court’s latest order allowed the government to revisit the company’s pending liabilities. The ruling gives the Centre legal flexibility to rework repayment terms, potentially paving the way for one of the biggest debt restructurings in the telecom sector in recent years.
Legal experts and market watchers said the government already has the authority to take such steps under the new Telecommunications Act, which includes a “voluntary undertaking” clause that allows policy-level dispensations.
“The minister and the Attorney General have also been quite transparent in stating that the government is now a shareholder, so the perspective has evolved. In that context, the Supreme Court has essentially said, the issue falls within the policy domain of the government, and they can decide. In principle, every possible option could be on the table,” a lawyer told Moneycontrol on condition of anonymity. He added that any decision would have to be guided by transparency and fairness.
A bench comprising Chief Justice BR Gavai and Justice K Vinod Chandran, on October 27, said that any decision on granting relief to Vodafone Idea falls within the government’s policy domain. The observation came while hearing Vodafone Idea’s petition filed last month, which challenged the Department of Telecommunications’ (DoT) demand for an additional Rs 9,450 crore in Adjusted Gross Revenue (AGR) dues. The country’s third-largest telecom operator has also sought a waiver of interest and penalties, arguing that several components of the dues remain disputed and unfinalised.
“Taking into consideration the change in circumstances that the government itself now holds a substantial equity stake in the petitioner company, and further that the issue involved is likely to have a direct bearing on the interests of 20 crore consumers, this is a matter within the policy domain of the Union,” the Supreme Court said in its order.
“If the Union, in the particular facts and circumstances, decides to take a view, there would be no reason why it should be prevented from doing so. We dispose of the petitions with these observations,” the bench added, while clarifying that its order is confined to the specific facts and circumstances of this case.
Relief options on the table
Vodafone Idea currently owes around Rs 83,400 crore in AGR dues, with annual payments of Rs 18,000 crore until 2031. Including penalties and interest, its total liabilities to the government are estimated at nearly Rs 2 lakh crore.
Among the relief options before the department of telecommunications (DoT) is an extension of the repayment timeline by two decades—till 2051—which would significantly ease annual obligations and stabilise cash flows.
Another option involves waiving a significant portion of interest and penalties, which together account for most of the dues. The government had earlier considered a proposal to waive 50 percent of interest and all penalties and interest on penalties, which could reduce the company’s dues by nearly Rs 50,000 crore. Even a partial waiver could slash liabilities by thousands of crores, offering a meaningful boost to Vodafone Idea’s balance sheet.
A third aspect under review is the accuracy of the DoT’s calculations. Vodafone Idea has long argued that errors and duplications inflated its dues. If these discrepancies are corrected, the outstanding amount could shrink substantially, paving the way for debt recalibration and cleaner financials.
Funding outlook brightens
If these measures are implemented, the impact could be considerable. Lower financial stress would free up resources for network expansion and service improvement while improving the company’s chances of securing roughly Rs 30,000 crore in new bank loans.
“There is always a sense of comfort that government support can bring, especially in terms of relief measures that would enable lenders to move ahead with Vodafone Idea’s funding plans. The government has been supportive so far, and Vodafone Idea is optimistic that it will be able to secure funding alongside the anticipated relief,” a source told Moneycontrol.
“The telco is also actively exploring options with non-banking financial institutions and remains deeply engaged on all fronts. Once there is clarity on the government’s decision, we expect tangible progress on the funding side,” the person added.
Vodafone Idea’s average revenue per user (ARPU) has climbed to Rs 177, and the growth of ARPU increase is now on par with rivals, the person said, adding banks are taking note of the improving performance, reduced subscriber losses, and the benefits of recent network investments.
Three-player market structure key to policy thinking
“The government has been clear that India needs a strong three-player private telecom market, and that structure must be preserved. The key question now is how soon this issue can be resolved,” another source said.
The second source added that Vodafone Idea’s bank debt is less than Rs 2,000 crore and is expected to decline further in the coming quarters.
“Vi’s major obligations are spectrum and AGR payments—both payable to the government, which already holds a 49 percent stake in the company. It is therefore logical for the government to act swiftly, as a faster resolution will ultimately yield better returns. That’s why our discussions with the government remain active and constructive,” he said.
Vodafone Idea, in a BSE filing on October 27, welcomed the SC decision and said it looks forward to working closely with the telecom department to find a resolution that serves the interests of its nearly 200 million subscribers. Terming the court’s direction as a boost to the government’s Digital India vision and the Prime Minister Narendra Modi’s broader digital ambitions, Vodafone Idea said the detailed order is awaited.
The AGR dispute dates back to 2020, when the Supreme Court upheld the DoT’s calculations of dues up to 2016–17 and ruled out any reassessment. However, in September this year, Vodafone Idea approached the court again after DoT raised fresh demands of Rs 9,450 crore for the period up to 2018–19.
Of this, Rs 2,774 crore was sought from the merged Vodafone Idea entity and Rs 6,675 crore from the pre-merger Vodafone Group. The DoT informed the company that licence fee dues were calculated with interest and penalties up to October 2019 and updated till March 2025, with interest at 8 percent per annum.
While the Supreme Court’s latest order offers hope, it is case-specific. The bench clarified that its decision applies only to the “special circumstances” of Vodafone Idea—particularly the government’s 49 percent shareholding and the company’s 200 million subscribers. Even so, experts believe the ruling provides a legal foundation for the government to extend similar support to other operators if it chooses to do so.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
