Vodafone-Idea gets 10-year relief on AGR dues, know how the loan will be repaid?

News Topical, Digital Desk : Citing Delhi-based government sources, the Economic Times has claimed in its report that Vodafone Idea (Vi) has technically got a 10-year relief to pay more than 95% of its Adjusted Gross Revenue (AGR) dues.

This significant relief package is expected to help the debt-ridden company recover commercially. Reportedly, Vi's stock, which fell on Wednesday, rebounded on Thursday as the market gained new clarity on the potential benefits of the relief package.

According to a report in the Economic Times, the government has frozen Vi's AGR dues at ₹87,695 crore until December 31, and a committee will be formed to re-evaluate these dues in the next three to four months. A senior official, speaking on condition of anonymity, said that the amount could be significantly reduced after the re-evaluation, and the new amount will have to be paid between financial years 2036 and 2041. According to the official, the company had previously requested an extension in the Supreme Court to FY41, and the government has now granted it the necessary time to recover its business. 

How will the company make the payment? According to the report, Vi will make payments of approximately ₹114 crore annually until FY36, starting from the current financial year and continuing through FY31. For the next four years, from FY32 to FY35, the company will make annual payments of ₹100 crore. Since the company will continue to make payments annually, technically, there is no full moratorium on the payment schedule. However, there will be a clear five-year moratorium on frozen liabilities, which will be revalued later. The AGR dues for FY18 and FY19, amounting to approximately ₹700–800 crore, will be repaid in installments of ₹114 crore each until FY31. Citing exchange data, the Economic Times reported that Vi's stock jumped 8% to close at ₹11.62 on the BSE on Thursday. The stock had hit a lower circuit a day earlier following reports of no waivers from the relief package, but clarity on the package's structure and potential relief has lifted the stock. Analysts believe the new deadline and phased payment system for AGR dues will ease immediate pressure on the company's cash flow. 

What was the controversy? The Supreme Court's landmark decision regarding the AGR dispute came in October 2019. This decision included dues up to FY17, and the Department of Telecommunications subsequently sought recovery from companies like Vi and Bharti Airtel by establishing liabilities for FY18 and FY19 as well. In September 2021, the government granted a four-year moratorium on AGR dues up to FY19, which expires with this financial year. Now Vi has got an additional five-year moratorium on AGR dues up to FY17, while the dues for FY18 and FY19 will have to be paid as per the scheduled schedule. According to the report, although the major instalments of AGR dues will start from FY32, the company will also have to pay spectrum instalments till FY36, hence there will be no pressure to pay AGR in equal instalments during that period. An official said that most of Vi's spectrum auction dues will be paid by FY36 and the company's financial position is expected to improve by then, although the total spectrum liabilities will continue till FY44.

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