India’s Department of Telecommunications (DoT) has reportedly dropped a plan to waive adjusted gross revenue (AGR) dues of telcos, which is especially bad news for financially struggling telco Vodafone Idea.
According to various media reports, the waiver was intended as a relief effort in the wake of a Supreme Court decision in October 2019 that ordered telcos to pay a combined INR1.47 trillion (US$17 billion) in legacy AGR dues to the government. In September 2021, the government approved a moratorium on AGR dues payments that expires in March-April 2026.
The DoT’s waiver plan, which surfaced in January this year, would have waived 50% of interest and all penalties and interest on penalties that make up almost 75% of the INR1.47 trillion figure. The waiver would have saved telcos over INR1 billion, more than half of which would have accrued to Vodafone Idea.
However, accoding to a report in the Economic Times on Thursday, citing “a person aware of the details", officials at higher levels of the government have objected to the waiver because they think it’s wrong to provide financial relief to private companies – at least some of which are running a profit – on an issue that was decided by the highest court in the country.
The main objection seems to be that Bharti Airtel – which would have seen INR38 billion in AGR dues erased under the plan – is doing well enough financially that it has the ability to pay the dues. Tata Teleservices – which has dropped consumer mobile services to focus on enterprise mobility – would have saved INR14 billion. The waiver doesn't cover Reliance Jio because it doesn't owe any legacy AGR dues.
The decision to scrap the waiver is potentially bad news for Vodafone Idea, which held a cash position of INR120.9 billion at the end of 2024 and has to pay INR291 billion in statutory dues in March 2026 when the moratorium expires, the report said. Last September, the Supreme Court rejected Vodafone Idea's plea to recalculate the AGR dues amount, which could have been reduced by 46%.
While the government recognises the need to financial relief for Vodafone Idea, it feels the waiver plan isn’t an appropriate solution, the report added.
The source told ET that the DoT is working on an alternate plan to provide financial relief for Vodafone Idea that could include taking an additional equity stake in the telco. It currently holds a 22.56% stake.
