NEW DELHI — In a move to prevent a private-sector duopoly and stabilize the country’s digital infrastructure, the Union Cabinet on Wednesday approved a significant relief package for debt-laden Vodafone Idea (Vi). The government has frozen the company’s Adjusted Gross Revenue (AGR) dues at ₹87,695 crore, granting a five-year moratorium on payments.
The decision, chaired by Prime Minister Narendra Modi, provides the struggling telco with much-needed “breathing space” to manage its operational challenges and massive debt-laden balance sheet.
Key Highlights of the Relief Package
Payment Holiday: Vodafone Idea will not be required to make immediate payments on the frozen amount. The repayment window has been rescheduled to begin from FY 2031-32 and will extend until FY 2040-41.
No Interest Accrual: During this five-year moratorium period, no interest will accrue on the outstanding principal of ₹87,695 crore.
Reassessment Window: The Department of Telecommunications (DoT) will reassess the frozen dues based on 2020 audit reports and deduction guidelines. A government-appointed committee will finalize the exact figure, which will be binding on both parties.
Immediate Dues: While the bulk of the debt is frozen, AGR dues for FY 2017-18 and FY 2018-19 (finalized by the Supreme Court in 2020) remain payable between FY 2025-26 and FY 2030-31 without change.
Strategic Rationale: Protecting Competition
The government, which holds a 49% stake in Vodafone Idea after previous debt-to-equity conversions, cited “larger public interest” as the primary driver for the package. Officials noted that maintaining a three-player private market is essential to:
Ensure Competition: Prevent a market concentration that could lead to higher tariffs.
Protect Consumers: Safeguard the service quality for Vi’s 20 crore subscribers.
Orderly Recovery: Ensure the government eventually recovers its dues through a viable, functioning entity rather than a collapsed one.
Market Reaction
Despite the relief, Vodafone Idea’s stock experienced a volatile session, tumbling 15.01% to close near ₹10.76 on the BSE. Analysts suggest the sell-off may be due to market expectations of a partial debt waiver rather than just a deferment, as the total liability remains on the company’s books.
“The government has given the company time, but not forgiveness,” noted one industry analyst. “While the immediate threat of insolvency has receded, the long-term viability of Vi still depends on fresh capital infusion and improved average revenue per.
