The Department of Telecom (DoT) has provided significant relief to Vodafone Idea by reassessing its adjusted gross revenue (AGR) dues at Rs 64,046 crore as of December, a substantial reduction from the earlier estimate of Rs 87,695 crore. This development offers a lifeline to the struggling telecom operator.
Payment Plan Details
In a stock exchange filing on Thursday, Vodafone Idea revealed that a committee constituted by the DoT has permitted the company to pay a minimum of Rs 100 crore annually over four years, spanning from 2031-32 to 2034-35. The remaining dues are to be cleared in six equal annual installments between 2035-36 and 2040-41. This revised schedule provides the company with extended time to manage its liabilities.
Earlier, in an analyst presentation in December, Vodafone Idea had indicated a payment plan of Rs 124 crore each for six years starting the last financial year, followed by Rs 100 crore annually from 2031-32 to 2034-35, with the balance paid over six years. The new DoT-approved plan aligns with these projections but formalizes the terms.
Background of the AGR Dispute
The dues originate from a prolonged legal dispute over the government's methodology for calculating AGR, which telecom operators had contested. Vodafone Idea approached the Supreme Court, which allowed the Centre to consider the company's grievances. In December, the government approved a partial moratorium on Vodafone Idea's dues, freezing them at Rs 87,695 crore and deferring repayments to the 2030s. This provided immediate cash flow relief for the debt-laden entity, which has since slipped to the third position in India's highly competitive telecom market.
The company reported a loss of Rs 5,284 crore in the December quarter, following an annual loss of Rs 27,400 crore in the fiscal year ending March 2025. In 2021, as part of a relief package, the government converted some dues into equity, resulting in the Centre holding a 49% stake, while promoters collectively own 25.6%.
Equity Infusion and Debt Repayment
Armed with the AGR relief, even as the reassessment was underway, the promoters infused Rs 27,000 crore in equity. Additionally, the company repaid Rs 36,500 crore of bank debt, freeing up resources for investment and expansion. This financial restructuring aims to stabilize the company and support its operations.
Subscriber Growth and Stock Performance
After experiencing a decline in its subscriber base over the past few years, Vodafone Idea showed improvement in subscriber additions in February and March. According to data from the Telecom Regulatory Authority of India (Trai), the company added over one lakh mobile subscribers in March. Although Vodafone Idea shares fell 0.7% on Thursday to close at Rs 10.2 on the Bombay Stock Exchange, the stock has climbed over 18% since April 7.
