Govt Unlikely to Waive AGR Dues, Setback for Vodafone Idea & Bharti Airtel

Cabinet Secretariat Informs DoT of Decision; Telecom Stocks React Negatively

The Indian government is unlikely to provide any waiver on adjusted gross revenue (AGR) dues, a decision that comes as a major setback for telecom operators Vodafone Idea (Vi) and Bharti Airtel. According to a report by CNBC-TV18, the Cabinet Secretariat has informed the Department of Telecommunications (DoT) that relief on AGR dues is no longer under consideration, leading to a decline in Vodafone Idea’s stock from its highs on March 19, 2025.

Developments in AGR Dues Decision

• DoT had earlier proposed a partial waiver, including:
  • 50% waiver on the interest component.
  • 100% waiver on penalties and interest on penalties.
• The government has reportedly decided against granting any relief, impacting telecom operators burdened with massive dues.
• Vodafone Idea’s AGR dues are estimated at ₹80,000 crore, while Bharti Airtel’s dues stand at approximately ₹44,000 crore.
• Supreme Court had earlier rejected review petitions from telecom operators, reaffirming the government’s AGR calculations.

Telecom Stocks React to AGR Waiver Setback

Following the reports of no relief on AGR dues, Vodafone Idea’s stock saw a sharp decline from its intraday highs on March 19, while Bharti Airtel also experienced volatility. Investors had been hoping for a government waiver, which would have eased the financial burden on these companies, especially Vodafone Idea, which continues to face liquidity challenges and fundraising hurdles.

Why AGR Dues Are a Burden on Telecom Operators

The AGR issue dates back nearly two decades, when the Department of Telecommunications (DoT) and telecom operators disagreed over the definition of AGR. While telecom companies argued that AGR should only include revenue from core telecom services, the DoT maintained that AGR should include all revenues, including non-telecom services.

• In 2019, the Supreme Court ruled in favor of the government, leading to massive dues for telecom operators.
• Vodafone Idea and Bharti Airtel were among the worst affected, with thousands of crores added to their liabilities.
• Since then, telecom operators have been engaged in legal battles and discussions with the government for relief.
• The latest decision not to grant waivers means these dues will continue to weigh on the sector, particularly on Vodafone Idea, which has been struggling to stay afloat.

Financial Implications for Vodafone Idea and Bharti Airtel

The decision is a bigger blow to Vodafone Idea than Bharti Airtel, as Vi has been facing severe financial distress, leading to:

• Limited ability to invest in 5G expansion and network upgrades.
• A struggle to raise funds from investors due to the heavy debt burden.
• A weakened competitive position against Reliance Jio and Bharti Airtel.

Bharti Airtel, on the other hand, is in a relatively stronger financial position but was still hoping for relief to improve cash flow and reduce liabilities.

Impact on Indian Telecom Industry

With the government refusing to ease AGR dues, the Indian telecom industry will likely see:

• Increased financial pressure on Vodafone Idea, which may be forced to raise additional capital or restructure debt.
• More aggressive competition in the sector, as Bharti Airtel and Reliance Jio continue to dominate, while Vodafone Idea struggles.
• Potential regulatory or financial interventions, if Vodafone Idea’s situation worsens.

Supreme Court’s Previous Rulings on AGR Dues

The Supreme Court has consistently upheld the government’s position on AGR dues, rejecting multiple review petitions filed by telecom operators.

• In 2021, the apex court dismissed pleas for “rectification” of AGR calculations, reinforcing that telecom companies must pay dues as assessed by the DoT.
• Earlier this year, Vodafone Idea and Bharti Airtel once again approached the court for reconsideration, but their requests were turned down.
• The finality of the Supreme Court’s ruling leaves no room for further legal challenges, meaning that telecom operators have no choice but to clear their dues.

Vodafone Idea and Bharti Airtel?

With the AGR waiver now off the table, telecom operators will need to:

1. Strengthen Financial Strategies

   • Vodafone Idea will have to accelerate its fundraising plans, as existing cash reserves are insufficient to meet debt obligations.
   • Bharti Airtel will continue leveraging its strong balance sheet to expand 5G services and maintain competitive leadership.

2. Explore Alternative Relief Measures

   • While a waiver is ruled out, operators may push for extended payment timelines or easier terms.
   • The government could consider policy incentives to support the struggling telecom sector.

3. Market Reactions & Investor Sentiment

   • Investor confidence in Vodafone Idea may weaken further, affecting fundraising efforts.
   • Bharti Airtel, being in a better position, is likely to navigate the situation with less financial strain.