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

Shares of telecom major Vodafone Idea (Vi) took a sharp U-turn, tumbling 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) dues at Rs 87,695 crore. The liability will be repaid over a 10-year period from FY32 to FY41, PTI reported, citing sources.

However, AGR dues pertaining to FY18 and FY19 will be payable by Vodafone Idea from FY26 to FY31, with no change in the amounts, sources told PTI. Further, the company’s AGR dues have been frozen as of December 31 and will be reassessed by the Department of Telecommunications, the report added.

The PTI report added that the Cabinet’s decision is aimed at protecting the government’s 49% stake in the company, enabling an orderly payment of Vodafone Idea’s dues and ensuring sustained competition in the telecom sector.

The government’s move 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 Centre is also evaluating the option of offering the telecom operator an interest-free moratorium of four to five years on statutory dues exceeding Rs 83,000 crore.

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

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

The uncertainty around these payments has weighed on Vodafone Idea’s ability to strengthen its balance sheet and fund operations. The Cabinet’s decision could also help the company move forward with its planned Rs 25,000 crore capital infusion, seen as crucial for improving its financial position.In October, the government informed the court that it was willing to examine the issues raised by Vodafone Idea and reconsider the matter, subject to the court’s permission. The Supreme Court subsequently said it saw no impediment to the Centre revisiting the issue and taking an appropriate decision, citing the government’s equity stake in the company and its base of over 20 crore customers.

Despite today’s sharp fall, Vodafone Idea shares have risen 61% over the past six months.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. They do not represent the views of The Economic Times)