Vodafone Idea AGR dues cut to ₹64,046 crore; spectrum burden persists

Vodafone Idea received a significant reprieve on Thursday as the government slashed the cash-strapped telecom firm’s adjusted gross revenue (AGR) dues by ₹23,600 crore to ₹64,046 crore, as of December-end, providing a measure of certainty that could help unlock critical bank financing.

AGR is the revenue base used to calculate licence fees that the telecom operators need to pay the government.

The telecom department finalised the revised figure after a reassessment ordered by the Supreme Court that had been pending for years. Under the revised payment schedule, Vodafone Idea will pay just ₹100 crore annually from FY32 to FY35, before six larger instalments of ₹10,608 crore each kick in from FY36 to FY41, deferring the bulk of its payments by 10 years.

In addition, the telecom company’s total outgo towards AGR payments over the next six years, from March 2026 to March 2031, would be ₹744 crore, a maximum of ₹124 crore per year. These are dues for FY18 and FY19, which were not part of the reassessment.

While welcome, the relief only allows the company a breather. Spectrum dues of ₹1.25 trillion as of December end remain untouched, with repayments of roughly ₹49,000 crore due over the next three years itself— increasing from ₹7,000 crore in the first year to ₹27,000 crore in the third year. Parallely, the company is trying to raise ₹25,000 crore in bank loans and ₹10,000 crore in non-funded facilities to fund a ₹45,000 crore capex plan over three years.

AGR dues trimmed

Brokerage Goldman Sachs, in a note on 4 February, has said that the path to medium-term free cash flow neutrality ‘remains unclear’, particularly given the spectrum repayment cliff beginning FY28.

The government's clarification comes as Vodafone Idea struggles to raise bank funding. DoT's reassessment followed Supreme Court rulings in October and November permitting recalculation of AGR dues, after which the Union Cabinet on 31 December moved to provide relief.

The AGR dispute dates back to 2019, when the Supreme Court ruled that telecom operators must pay statutory liabilities on AGR, including non-telecom revenue. In 2019, the DoT had pegged Vodafone Idea's AGR dues till FY17 at ₹58,254 crore. At that time, Vodafone Idea’s self-assessment estimated the dues at ₹21,500 crore. Later, the 2020 order barred any self-assessment or reassessment, amid discrepancies between DoT’s calculations and operators’ self-assessed dues. After that, the Supreme Court rejected curative petitions from Vodafone Idea and other operators in August 2024 and 2025 seeking a waiver before agreeing to hear the reassessment matter, allowing the government to reassess its dues.

To be sure, the government owns a 49% stake in Vodafone Idea. Bharti Airtel, which was also at the centre of the AGR dispute with DoT, had also urged the government for parity with Vodafone Idea in the recalculation of its AGR dues. However, the government said the Supreme Court was restricted from recalculation of dues for Vodafone Idea, and any other operator will have to come via the court route to seek a similar exercise.

Banks hold the key

Bharti Group’s deferred payment liability towards AGR was at ₹51,091 crore as of 31 December, according to government estimates.

For Vodafone Idea, the relief would give a much-needed clarity to banks on its dues and could help to expedite the much-needed funding. To support the capex plan of ₹45,000 crore over the next three years, the telecom operator is looking to raise ₹25,000 crore in bank funding and ₹10,000 crore in non-funded facilities.

In January, Vodafone Idea had said it is targeting double-digit revenue growth, a threefold increase in operating profit, and sustained subscriber additions over the next three years, as it unveiled its Vi 2.0 strategy.

“AGR overhang is behind us…I think to my mind it (relief from the government) is a definitive, conclusive long-term solution with a very clear visibility on our cash flow,” Vodafone Idea CEO Abhijit Kishore had said during an investor call in January.

Analysts said the AGR relief may help Vodafone Idea stay afloat in the near term, but it does little to address the company’s larger debt burden.

In December, brokerage Ambit Capital had said that the company would need an Arpu (average revenue per user) of ₹300 in FY30 to survive. This is possible only if the telecom industry tariff repair continues.

On Thursday, shares of Vodafone Idea closed 1.07% lower at ₹10.18 on the National Stock Exchange.