Vi AGR relief puts ISP, non-telco dues back in focus

The government’s decision to grant substantial adjusted gross revenue (AGR) relief to Vodafone Idea (Vi) is expected to open the floodgates for similar demands from independent internet service providers (ISPs) and other non-telecom entities facing sizeable AGR liabilities.

On Wednesday, the Union Cabinet reportedly approved a rescue plan for Vodafone Idea, granting the financially stressed operator a 10-year moratorium on the payment of more than 95 per cent of its AGR dues. As per the decision, AGR liabilities up to FY17, amounting to Rs 87,695 crore as of December 31, 2025, have been frozen, with a committee set up to review the remaining obligations.

While the relief is aimed at preserving competition in the telecom sector, it has also rekindled long-standing concerns across the wider communications ecosystem, particularly among thousands of independent ISPs and non-telcos that have been grappling with AGR demands running into tens of thousands of crores.

Background: AGR and its expanding scope

The issue traces back to the Supreme Court’s 2019 ruling, which broadened the definition of AGR to include non-core revenues. Following the judgment, the Department of Telecommunications (DoT) raised substantial dues not only on telecom operators but also on ISPs, VSAT operators and several public sector undertakings.

Industry estimates suggest that non-telecom entities alone owe around Rs 82,000 crore in AGR dues. In fact, more than 96 per cent of the initial DoT demands on non-telcos exceeded Rs 4 lakh crore, before dues for some public sector companies, including ONGC, GAIL and PowerGrid, were subsequently withdrawn. This selective relief prompted several private firms to seek similar treatment through legal channels.

ISPs see hope in Vi relief

For independent ISPs, the relief to Vodafone Idea has renewed hopes of long-awaited policy support. The sector has been seeking implementation of a Digital Communications Commission (DCC)-approved policy that proposes exempting fixed-line broadband services from the 8 per cent licence fee for a period of ten years.

ISPs argue that they face intense competition from large telecom operators while operating on significantly thinner margins. Many smaller players, particularly those serving semi-urban and rural markets, are under severe financial strain and contend that AGR liabilities threaten the sustainability of broadband expansion.

Industry participants maintain that if telecom operators can receive relief in the interest of sector stability, ISPs, who form the backbone of India’s internet infrastructure, deserve similar consideration.

Wider ripple effects across the sector

The Vi decision may also encourage other telecom operators to re-examine their dues. Bharti Airtel, which is expected to pay over Rs 42,000 crore in AGR dues from the next financial year, has indicated that it will approach the DoT for a reassessment following the Supreme Court’s approval of a comprehensive reconciliation of liabilities, including interest and penalties. However, the company has not yet formally sought relief.

At present, Vodafone Idea remains the only private company to receive such extensive government assistance, underscoring the exceptional nature of the decision.

Balancing relief with policy consistency

The growing chorus of demands poses a complex challenge for the government. While relief measures may be justified to prevent market disruption or protect critical infrastructure, extending similar concessions across sectors could have significant fiscal implications and raise questions of regulatory consistency.

Going forward, policymakers may need to strike a careful balance, possibly through clear eligibility criteria, differentiated treatment based on sectoral impact, or time-bound relief frameworks, to ensure that support measures do not become open-ended or undermine revenue certainty.

As India pushes ahead with its digital connectivity goals, the manner in which AGR issues are resolved for telecom operators, ISPs and non-telcos alike will play a crucial role in shaping the future competitiveness and financial health of the communications ecosystem.