Major Relief For Vodafone Idea? Government Reportedly Plans Moratorium For AGR Dues

In what could be a massive development for Vodafone Idea, the government is poised to offer an interest-free moratorium for the company on account of its massive adjusted gross revenue (AGR) liabilities, reports The Economic Times.

The report points out that the government is planning a relief package that would cover the telecom operator's pending statutory dues, amounting to over Rs 83,000 crore.

The relief also includes a moratorium of four to five years, thus providing immediate liquidity relief to the cash-strapped Vodafone Idea.

As part of the relief package, Vodafone Idea would be asked to clear the arrears in the form of six instalments. But perhaps most importantly, the total liability could be reduced substantially to nearly half, pending a reassessment by a newly-formed committee.

This new panel, likely headed by a secretary-level official, will evaluate the claims of both the Department of Telecommunications (DoT) and Vi before finalising the amount.

The proposal is expected to be placed before the Cabinet for approval in the coming weeks.

As part of the present schedule, Vi faces a deadline next March to pay the first installment of over Rs 18,000 crore, following the end of a previous moratorium that was granted in 2021.

Unlike the previous relief, however, there will be no interest charged on the new relief and would 'seal' the outstanding amount. This will prevent any kind of future interest accrual.

The relief is reportedly specific to Vi, given its precarious financial position and the government’s 48.99% stake in the entity. The Supreme Court recently allowed the Centre to craft a special package for the telco.

If finalized, this move could pave the way for Vi to secure critical funding. Reports suggest New York-based Tillman Global Holdings is in talks to invest $4-6 billion, though contingent on this debt restructuring.