Under mounting pressure from pending AGR dues from the 2015 spectrum auction and spectrum fees, Vodafone Idea (Vi) has proposed to the government that it surrender some spectrum acquired before 2021. The telecom firm, jointly owned by the UK's Vodafone Plc and the Aditya Birla Group, outlined this plan in a letter to the Department of Telecommunications (DoT) secretary, Neeraj Mittal, on March 10, according to a report by The Economic Times (ET).
According to Vi's latest earnings, it owes the government around Rs 2.27 trillion in licence fees and spectrum charges, which it needs to pay off by FY31 in installments. As of December 2024, Vi's AGR dues stood at Rs 70,000 crore, while its cash reserves were just Rs 12,090 crore.
To manage its financial obligations, Vi has proposed surrendering some spectrum acquired before 2021 to reduce its bank guarantee requirement for the March 2015 spectrum auction from Rs 6,091 crore to Rs 2,900 crore, ET reported. In telecom auctions, the government requires these guarantees from companies that defer upfront spectrum payments.
Beyond the 2015 auction, Vi has also reportedly proposed offsetting its dues using past overpayments, existing bank guarantees (BGs), and cash deposits with DoT. The company cited overpayments of Rs 9,900 crore in 2016 and Rs 8,800 crore in 2012 and 2014. Vi says it had previously provided DoT with Rs 5,800 crore in BGs and a Rs 2,450 crore cash deposit.
It urged DoT to consider its Rs 26,950 crore in securitisation options and avoid coercive action.
Vi Asks Govt to Raise Stake
Apart from spectrum surrender, the telecom firm is also asking the government to convert pending regulatory dues into equity. In a letter dated March 11, Vi’s chief executive, Akshaya Moondra, requested the DoT secretary to urgently allow the conversion of the telecom's adjusted gross revenue (AGR) and spectrum payments into equity, ET reported.
The report claims that if the government agrees, it would mean raising its stake in Vi from the current 22.6% to 49%.
In 2023, the Prime Minister Narendra Modi-led government asked Vodafone Idea (Vi) to convert Rs 161.3 billion in interest it owed on spectrum and other licence fees into equity, making the government a 33% stakeholder in the telecom major and its largest single shareholder. The swap was part of a 2021 telecom relief package, which was introduced to provide financial support to the sector, particularly to Vodafone Idea (Vi) and Bharti Airtel, both of which were struggling with high debt and AGR dues.
The dispute dates back to 1999 when DoT defined AGR to include all revenues of a company, including non-telecom sources. In 2019, the Supreme Court upheld DoT’s definition, forcing operators to pay dues, with a 10-year repayment schedule set in 2020. The government provided temporary relief in 2021 by approving a moratorium on payments, but in 2025, the Supreme Court dismissed telecom firms' petitions for recalculating dues.
