AGR moratorium talks revive hopes for Vodafone Idea

Vodafone Idea Limited (VIL), India’s third-largest telecom operator, may receive further relief on its adjusted gross revenue (AGR) obligations as it continues to face financial stress. The company is due to pay more than Rs 18,000 crore in AGR-related dues in the near term, prompting discussions around additional support from the government.

According to reports, the government is considering granting Vodafone Idea an interest-free moratorium of four to five years on approximately Rs 83,000 crore of outstanding statutory dues linked to AGR. Such a move would provide immediate cash flow relief and ease pressure on the operator’s balance sheet, particularly as interest would not accrue during the moratorium period.

Vodafone Idea’s total AGR liability stands at around Rs 83,000 crore. Without a significant capital raise and a sustained improvement in operating performance, the company is unlikely to be in a position to service these dues under the current repayment schedule. As a result, an extension of the moratorium, this time without interest, appears to be one of the limited options available to prevent further financial deterioration.

Sources suggest that this relief measure may apply only to Vodafone Idea. Bharti Airtel, which also has AGR liabilities, is not expected to benefit from a similar concession, as it is considered financially capable of continuing payments under the existing terms, even though an interest-free deferral would be advantageous.

Under the proposed arrangement, Vodafone Idea would be required to repay the dues in six instalments after the moratorium period ends. However, there are indications that a reassessment of the payable amounts could significantly reduce the overall liability, potentially by a substantial margin.

Vodafone Idea’s management has repeatedly stated that it would be unable to meet AGR payment deadlines without government support. The proposed relief could improve the company’s prospects of raising fresh capital and stabilising operations. The AGR dues stem from a 2019 Supreme Court ruling that upheld the Department of Telecommunications’ definition of AGR, which includes non- telecom revenue. Under the relief plan, Vodafone Idea’s AGR liability would be frozen for the duration of the moratorium, with no additional interest accruing.