The Centre is evaluating a spread of aid measures for Vodafone Thought (Vi), geared toward easing the telecom firm’s huge adjusted gross income (AGR)-related dues of Rs 84,000 crore, amid rising considerations over the telco’s means to outlive with out speedy monetary flexibility.
Additionally Learn: Communications Minister Guidelines Out AGR Reduction, Says Vodafone Thought Should Stand on Its Personal
Reduction Measures Beneath Consideration
Among the many proposals into account is an extension of the compensation tenure from the present six years to twenty years. This might be accompanied by a shift from compound curiosity of 29-30 p.c to a easy rate of interest of 8-10 p.c on excellent dues, sources accustomed to the matter advised ET. Such a transfer would considerably cut back Vi’s annual fee obligations and general legal responsibility, providing much-needed respiratory area to the cash-strapped firm.
“If such phrases certainly apply to Vi, its annual fee burden will shrink considerably, though some are questioning whether or not telco’s present money flows are adequate to honour even essentially the most beneficiant compensation covenants. A second possibility is to cost a token quantity of round Rs 1,000-1,500 crore yearly towards half fee of these dues till a last determination is taken on the broader AGR situation,” a supply was quoted as saying.
“Aside from these two choices, another artistic proposals are additionally being explored, and the aid could also be given by both one or a mixture of choices,” stated one of many individuals cited above, as talked about within the report.
Additionally Learn: Vodafone Thought’s Monetary Viability in Doubt as Govt Guidelines Out Additional Fairness Conversion: Report
Maintain Vi Afloat
One other particular person reportedly stated the federal government’s intent is to maintain the corporate afloat. If Vi folds up, New Delhi could be the largest loser: the Centre is the most important shareholder with a 49 p.c stake, and a majority of the excellent dues would come to the treasury.
“For the reason that identified or present choices (corresponding to waiving the curiosity and penalties) aren’t understanding, one thing new must be solid. However no matter possibility is finalised, it could be legally tenable,” a second particular person was quoted as saying.
Based on the report, if carried out prospectively, the change in curiosity computation alone might save Vi over Rs 16,000 crore, with a lot greater financial savings doable beneath retrospective software. Vi has excellent AGR dues to the tune of Rs 83,400 crore as of March 2025, annual fee instalments of which fall due beginning March 2026, and must be paid till March FY31. Vi must pay Rs 18,064 crore by March of this monetary yr. With a change to easy curiosity and an prolonged fee interval, annual dues might be lowered to Rs 6,000–8,500 crore.
Additionally Learn: Vodafone Thought Should Clear Authorities Dues, Says Minister
AGR Verdict
Presently, telecom operators like Vodafone Thought and Bharti Airtel, impacted by the Supreme Court docket’s 2021 AGR verdict, are liable to pay compound curiosity of roughly 29–30 p.c yearly on their excellent dues. A shift to a easy curiosity construction at a price of 8–10 p.c would considerably cut back the full monetary burden and restrict the buildup of dues within the years forward.
“However because the firm received’t be capable to pay even that quantity given its money flows, the instalments might be prolonged to twenty years. In such a case, the annual outgo might be decrease,” the primary particular person cited above was quoted as saying. In its scenario-building for Vi, the federal government estimates that if the corporate is required to pay the total Rs 18,064 crore instalment due by end-FY26, it could not have funds to satisfy the legal responsibility in FY27 and thus could go bankrupt.
The urgency stems from the federal government’s place as Vi’s largest shareholder, following the March 2025 conversion of Rs 36,950 crore in spectrum dues into fairness, which elevated its stake to 49 p.c. A possible collapse of the telco would inflict direct monetary losses on the Centre and disrupt market competitors.
Additionally Learn: Authorities Stake in Vodafone Thought Rises to 48.99 P.c After Contemporary Fairness Allotment
Vi’s Dire Monetary Outlook
Regardless of earlier reliefs, Vi stays beneath extreme monetary pressure. It must pay over Rs 20,000 crore yearly—together with each AGR and spectrum public sale dues—even after the fairness conversion. With a money stability of Rs 9,930 crore on the finish of March, the corporate has knowledgeable the federal government that it can not meet fee obligations as soon as the four-year moratorium on AGR and spectrum funds ends this fiscal.
Lenders Await Readability
Vi is at present making an attempt to boost Rs 20,000–22,000 crore from lenders, who’re searching for readability on the AGR dues earlier than continuing. Earlier this month, the telco’s board additionally authorised plans to boost as much as Rs 20,000 crore by means of numerous monetary devices.
To DoT: Vodafone Thought Says It Can’t Function Past FY 2025–26 as Banks Refuse Loans
Based on the report, even when the annual instalments are decreased to Rs 6,000-8,500 crore every by extending the fee interval, it could nonetheless not carry any tangible advantages and, given the telco’s money flows, it could not meet the liabilities past 2028-29.
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