The Union cabinet's much-anticipated decision on adjusted gross revenue (AGR) dues has delivered a severe blow to Vodafone Idea Ltd, leaving the beleaguered telecom operator in a state of uncertainty and sending its stock into a tailspin. Instead of a clear resolution, the cabinet on Wednesday approved a plan that freezes a portion of the dues but fails to address the company's immediate liquidity crisis or provide a final figure for its total liability.
The Cabinet's Decision and Its Immediate Fallout
According to officials familiar with the deliberations, the cabinet has decided to freeze the struggling telco's pending AGR dues at ₹87,695 crore for a period of five years. This frozen amount can be paid by the company from the fiscal year 2032 (FY32) through FY41. While this prevents the dues from escalating further due to interest and penalties, it does not reduce the overall burden.
Critically, the officials indicated that a recalculation of these dues is still possible, with the Department of Telecommunications (DoT) tasked with a reassessment. "The AGR dues frozen as on 31 December shall also be reassessed by DoT," an anonymous official stated. The outcome of this reassessment will be decided by a government-appointed committee and will be binding on both parties.
The market reaction was swift and brutal. The lack of clarity and definitive relief spooked investors, causing Vodafone Idea's stock to plunge 11.5% on the National Stock Exchange to ₹10.67 on Wednesday.
Persisting Liabilities and Fundraising Roadblocks
In a significant caveat, the cabinet's decision does not cover all AGR dues. The company will still be required to pay AGR dues pertaining to financial years 2018 and 2019 (FY18 and FY19), which are over and above the frozen ₹87,695 crore. These payments are scheduled from FY26 through FY31.
This partial and delayed relief creates a major hurdle for Vodafone Idea's urgent need to raise capital. The telco had previously warned that it would not survive beyond FY27 without fresh funds. Banks and potential investors have been hesitant to commit capital without a clear resolution of the AGR overhang and visibility on the company's total liabilities.
"Any delay in finalising the liability could complicate the company's ability to raise external funding for much-needed investments," noted independent telecom analyst Parag Kar. He highlighted that debt would carry interest obligations while equity infusion requires clear visibility on outstanding dues, especially with annual spectrum instalments set to rise sharply from FY27.
Financial Context and Recent Moves
The government currently holds a nearly 49% stake in Vodafone Idea, acquired after converting approximately ₹53,083 crore of past dues into equity in February 2023 and April 2025. Of the company's total government dues, which are around ₹2 trillion, about ₹1.17 trillion relates to spectrum payments, separate from the AGR component.
In a separate development, Vodafone Idea announced that its promoter group entity, Vodafone International Holdings B.V., has entered into an agreement to release a pending ₹5,836 crore payment to the company. As per the deal, the telco will receive ₹2,307 crore in cash over the next 12 months. The remaining ₹3,529 crore is secured through the earmarking of 3.28 billion equity shares by certain Vodafone Group shareholders for five years, with sale proceeds accruing to Vodafone Idea.
Earlier in December, the company raised ₹3,300 crore through secured non-convertible debentures (NCDs) via its subsidiary, Vodafone Idea Telecom Infrastructure Ltd (VITIL). The company also remains in talks with banks to raise ₹25,000 crore, a process contingent on clarity regarding its AGR dues.
Vodafone Idea, in an exchange filing, clarified that it has not received any formal communication from the government regarding the cabinet decision and will make disclosures as required.
