AGR Dues Waiver: In a relief to Jio, Airtel, govt weighs Rs 1 lakh cr Relief for Telcos

The government is mulling a proposal to waive 50% interest and 100% penalties and interest on penalties for telecom companies like Vodafone Idea and Bharti Airtel. This move aims to address the bulk of adjusted gross revenue (AGR) dues imposed after the 2019 Supreme Court order. Analysts believe this decision would be a game-changer for India's telecom industry, preventing a duopoly and promoting healthier competition.  

According to sources, the proposed move could provide a financial relief of over ₹1 lakh crore to telecom companies, with Vodafone Idea (Vi) set to benefit the most, receiving over half of the relief. This comes as a crucial lifeline for Vi, which is struggling to repay its AGR dues, worth thousands of crores, starting from FY26, and faces concerns about its long-term viability. 

The proposed relief plan could significantly reduce the AGR dues of telecom companies: Vodafone Idea's dues may decrease by over ₹52,000 crore, Bharti Airtel's by nearly ₹38,000 crore, and Tata Teleservices' by around ₹14,000 crore. However, Reliance Jio is not impacted as it doesn't have any legacy AGR dues. Notably, Tata Tele has ceased retail mobility services and now only offers enterprise mobility services. 

“The proposal is being discussed at the highest level including the finance ministry, the telecom department and the cabinet secretariat,” said one of the persons aware of the details. 

The government is planning to unveil a significant relief package for the telecom sector in the February 1 budget, marking the second major bailout since September 2021. This move follows last month's decision to waive bank guarantees for past spectrum dues, which greatly benefited Vodafone Idea (Vi). As a result, Vi will no longer need to provide guarantees worth Rs 24,800 crore, freeing up space for lenders to offer debt to the carrier.  

The telecom industry, already struggling financially due to intense competition after Reliance Jio's entry in 2016, faced a significant setback when the Supreme Court ruled in favor of the government in October 2019, imposing ₹1.47 lakh crore in Adjusted Gross Revenue (AGR) dues. This massive amount included ₹92,642 crore in license fees and ₹55,054 crore in spectrum usage charges. Notably, approximately 75% of these dues comprised interest, penalties, and interest on penalties, adding to the financial burden on telecom companies.