The Centre on Wednesday approved a relief package for Vodafone Idea, freezing its outstanding adjusted gross revenue (AGR) dues and allowing a five-year moratorium on payments, a move seen as critical to stabilising the debt-laden telecom operator, PTI reported citing sources.The relief measures cleared by the Union Cabinet are aimed at protecting government interests — which include a 48.9% stake in the company — while enabling an orderly repayment of statutory dues, ensuring competition in the telecom sector and safeguarding services for Vodafone Idea’s nearly 20 crore subscribers, sources said.Under the decision, the Cabinet agreed to freeze Vodafone Idea’s AGR dues at Rs 87,695 crore.

The company will begin repayments from the 2031-32 financial year, with the full amount to be cleared by 2040-41, according to sources familiar with the matter.

Moratorium now, reassessment later

The frozen AGR dues will be reassessed by the department of telecommunications based on the deduction verification guidelines issued in 2020 and relevant audit reports, sources said. A government-appointed committee will decide the final amount, and its determination will be binding on both sides.

AGR dues represent payments owed by telecom operators to the government based on adjusted gross revenue, on which licence fees and spectrum usage charges are levied.However, AGR dues for the 2017-18 and 2018-19 financial years — finalised following the Supreme Court’s September 2020 order — will remain unchanged. These dues will be paid between 2025-26 and 2030-31, without any revision, sources said.The amount payable over this six-year period works out to roughly Rs 120 crore annually, or about Rs 700–800 crore in total.Responding to a query from BSE, Vodafone Idea said in a regulatory filing: “We have not received any communication from the government in relation to the above-reported matter. As and when there is any development which requires disclosure, we will do the needful.”

Policy support amid financial strain

Vodafone Idea has been grappling with a prolonged financial crisis marked by intense price competition, high debt levels and large AGR liabilities arising from changes in the definition of adjusted gross revenue.

The company has faced persistent losses, a shrinking subscriber base and limited capacity to invest in network expansion even as rivals accelerated 4G and 5G rollouts.While successive rounds of government relief and equity conversion of dues have helped keep the company afloat, its longer-term viability remains dependent on sustained policy support, fresh capital infusion and an improvement in operating performance.Some market participants had expected the Cabinet to waive a portion of the AGR dues outright. Instead, the government opted for a moratorium on the bulk of the liabilities, coupled with a reassessment process, giving the operator time to stabilise operations, sources said.Sources noted that telecom is a critical infrastructure sector with strong linkages to economic growth and employment, and that the government remains committed to ensuring financial stability and preserving competition for consumer benefit, according to PTI.The move also comes against the backdrop of a recent Supreme Court order allowing the government to reconsider the additional AGR demand raised for the period up to 2016-17 and to comprehensively reassess all AGR dues, including interest and penalties.Vodafone Idea reported a loss of Rs 12,132 crore in the first half of the current fiscal, with net worth at negative Rs 82,460 crore as of September 30. Its total debt stood at Rs 2.02 lakh crore at the end of the reported quarter.The company has, however, shown some improvement, with consolidated net loss narrowing year-on-year to Rs 5,524 crore in the September 2025 quarter, aided by lower finance costs and higher average revenue per user following tariff hikes.Earlier this month, Vodafone Idea said its subsidiary VITIL raised Rs 3,300 crore through non-convertible debentures. The proceeds are to be used to meet payment obligations to the parent company, supporting capital expenditure and business growth.