4 min readNew DelhiJan 2, 2026 06:19 AM IST
First published on: Jan 2, 2026 at 05:42 AM IST
The Union Cabinet’s nod for a relief package to Vodafone Idea may set the stage for the government’s potential exit from the beleaguered telecom operator. Also under active consideration is the possibility of bringing in an investor from the private sector, top government sources, who did not wish to be named, told The Indian Express.
The Cabinet’s decision Wednesday to freeze the debt-ridden telecom operator’s hefty adjusted gross revenue (AGR) dues of Rs 87,695 crore for the next five years affords visibility over future liabilities, a precondition put forth by the private sector, the sources said.
Two big corporate groups had evinced interest at different points in time, the sources said. An internal yardstick for the government to exit would be that it would have to sell its stake at a profit. But no decision has been taken on the path to be taken for sale of government equity, the sources said.
Queries sent to the Department of Telecommunications and Vodafone Idea remained unanswered until publication.
The government had acquired 49 per cent stake in Vodafone Idea in February 2023 in lieu of the company’s interest dues. Beyond this 49 per cent equity, the new investor could eventually take majority control after the stake sale goes through, it is learnt.
A senior official had earlier said the government was concerned about the highly concentrated nature of India’s telecom sector and it would ostensibly like to have multiple players in this “critical sector,” for which Vodafone Idea needs to be “a viable player”. But its precarious financial situation has raised concerns about its survival in the competitive telecom marketplace.
The freezing of the adjusted gross revenue dues of Rs 87,695 crore and a rescheduling of their repayment by the Cabinet comes after the Supreme Court allowed the government to reassess the telco’s statutory dues earlier this year.
The Cabinet’s relief package to the telecom operator allows it to reschedule the statutory dues payment over a 10-year period from FY32 to FY41. The AGR dues for FY18 and FY19 shall be payable by the telecom operator over the period FY26 to FY31 without any change.
Of the AGR dues that Vodafone Idea owes to the government, annual payments of Rs 18,000 crore were supposed to start in March 2026. However, the company had approached the Supreme Court related to the AGR issue, and said if it was not able to secure relief from the payments, it would pose a big question mark over its financial stability and jeopardise the government’s stake in the company.
The AGR dues frozen as on December 31 shall also be reassessed by the Department of Telecommunications (DoT). The outcome shall be decided by a committee appointed by the government and that shall be binding on both parties.
In a petition in the Supreme Court earlier this year, Vodafone Idea had contended that it needed the relaxation, failing which its planned investments will not happen and any hopes of an improvement in its operational performance would be dashed. Including penalties and interest, its total liabilities to the government are estimated at around Rs 2 lakh crore.
With such a heavy cash burden and declining revenues and subscriber base, the company may not have enough cash flows to pay the dues. Hence, the Cabinet decision is being seen as a big boost for the company, which has been struggling to raise money from the market as investors stay away due to its high AGR obligations.
This was the second lifeline the government offered to the struggling company. As part of its 2021 relief package for the company, the government had in February 2023 approved the conversion of Rs 6,133 crore of Vi’s interest dues into equity.
As on December 2024, Vodafone Idea’s total debt was around Rs 2.3 lakh crore. Of this, Rs 77,000 crore was AGR liability and Rs 1.4 lakh crore was spectrum liability.
The freezing of the adjusted gross revenue dues of Rs 87,695 crore and a rescheduling of their repayment by the Cabinet comes after the Supreme Court allowed the government to reassess the telco’s statutory dues earlier this year.
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