New Delhi,  31 Dec

The Union Cabinet on Wednesday approved a major relief package for Vodafone Idea, freezing its outstanding adjusted gross revenue (AGR) dues and granting a five-year moratorium on payments, in a move aimed at stabilising the debt-laden telecom operator.

The Cabinet, chaired by Prime Minister Narendra Modi, decided to freeze AGR dues of ₹87,695 crore owed by Vodafone Idea Ltd (VIL). The company will begin repayments from the 2031–32 financial year and clear the dues by 2040–41, sources said.

AGR dues are payments made by telecom companies to the government based on adjusted gross revenue, a definition that includes not just telecom income but also non-core revenues such as interest, rent and asset sales.

However, AGR dues for FY2017–18 and FY2018–19, finalised following a September 2020 order of the Supreme Court of India, will continue to be paid between 2025–26 and 2030–31 without any change.

Vodafone Idea has been under sustained financial stress due to intense tariff competition, a heavy debt burden and large AGR liabilities arising from the revised revenue definition. The operator has posted persistent losses, lost subscribers and struggled to invest in network upgrades, even as rivals rolled out 4G and 5G services at scale.

While there was speculation that the government might waive part of the AGR dues, the Cabinet opted instead for a moratorium to give the company time to recover. The frozen dues will be reassessed by a committee based on audit reports, with its findings binding on both the government and the company, sources said.

Officials said the decision seeks to safeguard the government’s interests, given its 49 per cent stake in Vodafone Idea, while ensuring orderly recovery of dues, maintaining competition in the telecom sector and protecting the interests of nearly 20 crore subscribers