Vodafone Idea’s survival on PMO’s table as govt weighs fresh relief: Report

The four-year moratorium on AGR payouts ends in September, leaving the telco with little breathing space.

The Prime Minister’s Office has received a proposal from the Department of Telecommunications (DoT) seeking fresh relief for Vodafone Idea Ltd (Vi), Mint reported, citing two officials aware of the matter.

According to Mint, the informal note sent last month outlines “multiple relief options,” including an additional two-year pause on statutory payments currently under moratorium. The PMO will take the final decision, one of the officials told Mint.

Moneycontrol could not independently verify the report.

A telco on the edge

Vodafone Idea owes about ₹83,400 crore in adjusted gross revenue (AGR) dues, with annual payments of nearly ₹18,000 crore scheduled from March 2025. Its overall dues to the government stand at around Rs 2 trillion including penalty and interest, Mint said.

The debt-laden operator has repeatedly warned it cannot survive without funding support, as banks remain wary of lending given its financial stress. Vi employs over 18,000 people and has nearly 198 million subscribers. A collapse, analysts note, could reduce India’s telecom sector to a two-player market dominated by Reliance Jio and Bharti Airtel.

Relief measures on the table

Apart from the moratorium extension, the DoT has suggested allowing smaller annual payouts and waivers on penalties and interest, Mint reported.

In April, former CEO Akshaya Moondra wrote to the telecom department asking for a final settlement of Rs 17,213 crore as principal dues and a 100% waiver on penalties and interest. He warned that without a moratorium until FY30, banks would remain unwilling to extend crucial funding.

Fund-raising delays deepen worries

Vodafone Idea has been unable to close a long-pending Rs 25,000 crore debt fundraise needed to upgrade its 4G services and roll out 5G. Mint said analysts believe the delay in funding clouds the company’s survival prospects.

Without clarity on relief, the company’s three-year capex plan of Rs 50,000–55,000 crore is at risk of stalling.

Supreme Court setbacks

The situation worsened after the Supreme Court recently rejected Vi’s plea to waive Rs 45,000 crore in interest and penalties on AGR dues. The court had in 2019 ruled that AGR includes non-telecom revenue, dramatically inflating liabilities for telcos. Vi had estimated dues at Rs 21,500 crore, while DoT’s assessment stood at ₹58,000 crore, Mint noted.

The four-year moratorium on AGR payouts ends in September, leaving the telco with little breathing space.

Airtel seeks a level field

Rival Bharti Airtel has also sought relief. In April, the company asked the DoT to convert part of its ₹40,000 crore AGR dues into equity, which would give the government a small stake. Airtel’s vice-chairman Gopal Vittal told analysts the company would accept any decision taken by the government, Mint reported.