Govt Explores Options to Reduce Vi's AGR-Driven Liability, Shares Jump 6%

Prime Minister Narendra Modi-led government is considering to offer another lifeline to the financially troubled Vodafone Idea. The government is mulling various solutions to provide further relief to Vi on ₹ 84,000 crore adjusted gross revenue (AGR) dues, including increasing the repayment tenure from the present six years to 20 years and applying a simple interest on the due amount instead of compound interest or interest on interest, the Economic Times reported. The centre’s intent behind considering these options is to keep the troubled telecom company afloat, especially as the government is the biggest equity owner in Vi. 

“Apart from these two options, some other creative proposals are also being explored, and the relief may be given by either one or a combination of options,” the Economic Times reported, citing a source. “Since the known or existing options (such as waiving interest and penalties) are not working out, something new has to be forged. But whatever option is finalised, it would be legally tenable,” said the person in the report. 

The news brought joy for investors of Vodafone Idea, eventually pushing the stock over 6% higher in trade on June 24. 

Another option that the government is mulling is to charge a token amount of around ₹ 1,000-1,500 crore annually towards partial payment of the ₹ 84,000 crore AGR dues until the final solution is decided upon. 

If the government offers further relief to Vi, it is likely to significantly reduce its annual payment burden.

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Vodafone Idea AGR Dues 

Vi’s AGR liabilities as of March 2025 stood around ₹ 83,400 and the company has to start making installments towards that due from the financial year 2026 till FY31. As a part of its first installment by FY26, the telecom has to pay ₹ 18,064 crore. Its cash and bank balance as of March FY25 stood at ₹ 9,930 crore and with the cash crunch, the government thinks Vi’s survival is doubtful. The situation persists even after the government had earlier converted ₹ 36,950 crore of spectrum auction dues into equity in March and became the biggest shareholder with a 49% stake. The promoters of the company, i.e., the Aditya Birla Group and the Vodafone Group’s stake, stood at 25.57%. 

Telecom Minister’s Takes U-turn  

Union telecom minister Jyotiraditya Scindia signaled a U-turn on his previous stance. On June 24, at the World WiFi Day, the minister warned that the telecom sector can’t afford a duopoly. 

“It’s not good enough having a duopoly or one carrier or two carriers. India must have competition in every sector. India today is probably the only country in the world for competition in the ISP domain,” the telecom minister said, MoneyControl reported.