Regulation

India’s Vodafone Idea confirms debt deal

India’s Vodafone Idea confirms debt deal

As predicted in recent days by many news outlets, including this one, Indian operator Vodafone Idea today confirmed that its adjusted gross revenue (AGR) dues for the period from FY 2006–07 to FY 2018–19 are to be frozen from 31 December 2025.

The company will now have to pay INR1.24 billion (about US$12.6 million) annually over the next six years, from March 2026 to March 2031. After this period, the operator will pay INR1 billion (approximately US$11.1 million) annually over four years, from March 2032 to March 2035. The remaining AGR dues will be paid in equal annual instalments over six years, from March 2036 to March 2041.

In theory the 2036-2041 dues should be much heftier than the earlier payments (reports have suggested the frozen amount could be about US$9.72 billion). However, a committee is to be constituted by the Department of Telecoms (DoT) to reassess the AGR dues and there have been hints that the amount involved could be cut. We won’t know for sure, however, for a few months.

The Economic Times news service helpfully reminds us that AGR dues refer to payments owed by telecom companies to the government based on their adjusted gross revenue (AGR). This is the revenue on which operators must pay license fees and spectrum usage charges.

The big problem for Vodafone Idea is that even non-telecom income like interest, rent and asset sales has been included in the calculation of revenue (a redefinition confirmed by a Supreme Court ruling in 2019), adding to Vodafone Idea’s already massive AGR liabilities.

Will this arrangement boost Vodafone Idea’s prospects? Predictably enough, Vodafone Idea shares rose on the news, but it’s still not plain sailing for a company that is facing massive debts, a shrinking subscriber base, and limited ability to invest in network expansion. Its rivals are also well ahead of it with their 5G rollouts.



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