Centre Mulls 4–5 Year Interest-Free Moratorium On Vodafone Idea’s AGR Dues

The government is reportedly planning to allow cash-strapped Vodafone Idea (Vi) to defer repayment of its adjusted gross revenue (AGR) dues by four to five years, along with removing a portion of the interest on over ₹83,000 crore of pending dues. The move comes after the Supreme Court allowed the government to extend relief to the telecom firm.

Following the report, the company’s shares opened over 3% higher, but were trading down 1% at ₹11.54 on the BSE at 11 am.

As part of the proposal, the Centre may grant Vi an interest-free moratorium of four to five years, providing immediate relief to the financially strained operator. Once the moratorium ends, Vi would repay the dues in six instalments, with the total liability expected to be significantly reduced, possibly by nearly half, after a reassessment, the Economic Times (ET) reported, citing sources.

To determine the scope of the relief, the government is expected to set up a committee led by a secretary-level official to consider submissions from both the Department of Telecommunications (DoT) and Vodafone Idea. The panel will decide the final amount Vi will be required to pay, with an announcement likely in the coming weeks after Cabinet approval, the report said.

Under the existing schedule, Vi is required to pay over ₹18,000 crore in March 2026 as the first instalment once the 2021 AGR moratorium ends. That relief was not interest-free, leading to a steady increase in outstanding arrears.

Earlier, the telecom operator cautioned that its survival depends on fresh funding, but lenders have been reluctant to extend credit due to its strained balance sheet.

A few weeks ago, the Supreme Court permitted the government to undertake a comprehensive review and reconciliation of all outstanding dues of the company, including interest and penalties, up to FY17. The move was widely viewed as significant relief for the financially stressed telco.

In September, Vodafone Idea sought a waiver of penalties and interest on an AGR demand of ₹9,450 crore raised by the DoT, arguing that a large portion related to the pre-FY17 period that had already been settled by the apex court in 2020. Of the total amount, ₹2,774 crore pertains to post-merger liabilities, while ₹5,675 crore relates to pre-merger dues of the Vodafone Group.

The Centre emerged as Vodafone Idea’s largest shareholder in March this year after converting ₹36,950 crore of dues into equity, raising its stake to nearly 49%. Earlier, in 2023, the government had acquired a 33% stake in exchange for statutory dues of more than ₹16,000 crore.

According to the ET report, once the issue is resolved, Vodafone Idea could unlock fresh funding, including its planned ₹25,000-crore capital raise. A successful equity infusion would dilute the government’s stake and may allow the Centre to convert additional dues into equity, giving the company more financial headroom. Currently, the Aditya Birla Group holds a 9.50% stake in Vi, while the UK’s Vodafone Group Plc owns 16.07%.

Earlier reports said New York-based private equity firm Tillman Global Holdings was in talks to invest $4–6 billion (₹35,000–52,800 crore) in Vi and assume operational control. The proposal was contingent on regulatory relief, after which other investors could also show interest.

The report added that any relief would apply only to Vi, with Bharti Airtel required to continue paying its instalments as scheduled.