Vodafone Idea set to get interest-free moratorium on Rs 83,000 crore AGR dues: Report

Resolution of the AGR issue could enable Vi to raise fresh capital, including a planned Rs 25,000 crore equity infusion

The government is expected to provide Vodafone Idea (Vi) an interest-free moratorium of four to five years on over Rs 83,000 crore of pending statutory dues linked to adjusted gross revenue (AGR), offering immediate relief to the cash-strapped telecom operator, the Economic Times reports.

After the moratorium period ends, Vi will be required to pay the arrears in six instalments, though the total amount is likely to be reduced significantly-potentially by nearly half-following a reassessment of liabilities, sources told the Economic Times.

A committee headed by a secretary-level official, serving or retired, will hear inputs from both the telecom department and Vi before deciding the final payable amount, the report adds. The decision is expected in the coming weeks after Cabinet approval.

Currently, Vi is required to pay over Rs 18,000 crore next March as the first instalment, following a prior moratorium on AGR payments granted to telcos in 2021. That moratorium was not interest-free, leading to a steady increase in arrears due to 29-30% annual compound interest, according to experts cited by the Economic Times.

The AGR dues arise from a 2019 Supreme Court ruling, which upheld the Department of Telecommunications' (DoT) position that telecom companies must pay statutory fees, including spectrum and licence charges, based on adjusted gross revenue that incorporates non-telecom income.

Under the new relief package, Vi's outstanding amount would be frozen, with no further interest accruing. Rival Bharti Airtel is expected to continue its payments as scheduled, as the relief applies solely to Vi.

Vodafone Idea has repeatedly indicated its inability to meet AGR obligations and sought government support. The Centre, which holds a 48.99% stake in the company, previously converted part of Vi's dues into equity. The Supreme Court recently permitted the government to formulate a special package covering Vi's entire AGR liability, the Economic Times reports.

Resolution of the AGR issue could enable Vi to raise fresh capital, including a planned Rs 25,000 crore equity infusion, which would dilute the government's stake further and create additional flexibility for the company.

Other major shareholders include Aditya Birla Group (9.50%) and the UK's Vodafone Group Plc (16.07%). The Economic Times also notes that New York-based private equity firm Tillman Global Holdings is negotiating a $4-6 billion (Rs 35,000-52,800 crore) investment in Vi, potentially taking operational control, contingent on government relief. Several other investors may join once the relief is in place, sources told the Economic Times.