Government Weighs Relief Plan for Vi’s INR 84,000 Cr Debt Woes

Due to concerns that the telecom operator would fail without executive latitude, the Centre, which already owns the largest equity in Vodafone Idea (Vi) through the conversion of previous receivables into stock, is considering a number of options to give the telco additional relief on outstanding regulatory dues of INR 84,000 crore.

A media report cited that raising the repayment period from the current six years to 20 years and concurrently implementing simple interest on the outstanding balance rather than compound interest or interest on interest are two options on the table to address adjusted gross revenue (AGR)-related dues.

Its annual payment load may decrease considerably if such terms are applicable to Vi; nonetheless, some are doubting if the telco's current cash flows are adequate to meet even the most lenient repayment covenants.

The report further revealed that a second possibility is to charge a nominal sum of INR 1,000–1,500 crore per year to partially cover such obligations while a resolution is made on the larger AGR issue.

Several Other Options are Being Discussed

According to a number of media reports, in addition to these two solutions, several other innovative ideas are also being investigated, and any one or a combination of options may provide relief.

The government wants to keep the business open. According to a media report, something new needs to be created because the known or current options—like waiving the interest and penalties—are not working.

However, whichever choice is chosen, it would be viable from a legal standpoint. As of March 2025, Vi owed INR 83,400 crore in unpaid AGR dues; the annual payment instalments for this amount are due beginning in March 2026 and must be made by March FY31.

Currently, by March of this fiscal year, the losing telecom company must pay INR 18,064 crore. The government is concerned that the corporation won't be able to survive without any respite on the AGR dues, as its cash and bank balance at the end of March amounted to INR 9,930 crore.

Financial Hurdles of Vi

As a result of the Supreme Court's 2021 AGR verdict, telecom companies like Vi and Bharti Airtel currently pay between 29 and 30% compound interest on their existing debts each year.

The total outlay and accumulation for the upcoming years would be decreased if the same were converted into simple interest of 8–10%. A media report claims that if the decision is carried out prospectively, Vi can save more than INR 16,000 crore in interest costs following the conversion.

If the judgement is applied retroactively, the savings will be even greater. For instance, until 2031, Vi is required to pay INR 18,064 crore by March 31 of each year. However, the annual instalment would be almost INR 15,000 crore if the interest were converted to a basic interest of 8–10%.

The report went on to say that the payments might be prolonged to 20 years because the company's cash flows will not allow it to pay even that sum. The annual outlay could be less in such a scenario.

According to the government's scenario-building for Vi, the firm would go bankrupt in FY27 if it is forced to pay the entire INR 18,064 crore instalment that is due by the end of FY26.