Vodafone Idea shares crash 15% despite Cabinet freeze on Rs 87,695 crore AGR dues

Shares of telecom giant Vodafone Idea (Vi) made a sharp turnaround, falling as much as 15% to Rs 10.29 per share despite the Union Cabinet approving a relief package that freezes the company’s adjusted gross revenue (AGR) at Rs 87,695 crore. The liability will be repaid over a period of ten years from FY32 to FY41, PTI reported, citing sources.However, the AGR dues relating to FY18 and FY19 will be paid by Vodafone Idea from FY26 to FY31, with no change in the amounts, sources told PTI. Moreover, the company’s AGR contributions have been frozen as of December 31 and will be reassessed by the Ministry of Telecommunications, the report said.

The PTI report added that the cabinet’s decision is aimed at protecting the government’s 49% stake in the company, thereby enabling orderly payment of Vodafone Idea’s dues and ensuring sustainable competition in the telecom sector.The government’s decision to consider a partial waiver of interest, penalties and interest on penalties bodes well for Vodafone Idea as these together form a significant portion of the company’s total AGR liabilities. Reports had earlier suggested that the Center is also evaluating the possibility of offering the telecom operator an interest-free moratorium of four to five years on statutory dues above Rs 83,000 crore.

The development comes at a critical time for Vodafone Idea, which is under pressure to meet its March deadline to repay over Rs 18,000 crore.

This amount is part of the AGR moratorium granted to telecom operators in 2021. Under the existing schedule, the company faces annual AGR-related payments of nearly Rs 18,000 crore from March 2025.

The uncertainty surrounding these payments has negatively impacted Vodafone Idea’s ability to strengthen its balance sheet and finance its operations. The cabinet’s decision could also help the company move forward with its planned capital infusion of Rs 25,000 crore, which is considered crucial for improving its financial position. In October, the government informed the court that it was willing to investigate the issues raised by Vodafone Idea and reconsider the case, subject to the court’s permission. The Supreme Court then said it saw no bar for the Center to revisit the issue and take an appropriate decision, citing the government’s equity stake in the company and its customer base of over Rs 20 crore.

Despite today’s sharp drop, shares of Vodafone Idea are up 61% in the past six months.

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