Vi shares crash 15% as Centre's AGR relief disappoints investors
What's the story
Vodafone Idea's shares have hit a 15% lower circuit today, following the Union Cabinet's approval of an adjusted gross revenue (AGR) dues package for the financially troubled telecom operator. The government reportedly approved a 5‑year moratorium and freeze on Vodafone Idea's AGR dues of about ₹87,695 crore, rescheduling payments for the long term to easing the telco's debt‑laden balance sheet. The stock has gained over 45% in the last six months.
Payment plan
AGR dues rescheduled over a decade
The payment of ₹87,695 crore AGR dues have been rescheduled from FY32 to FY41. The Department of Telecommunications will reassess the frozen dues based on audit reports. Meanwhile, AGR dues for FY18 and FY19 will be paid by Vodafone Idea over the next five years. This new payment plan is expected to give the company some breathing room as it deals with its debt-laden balance sheet and operational challenges.
Stake protection
Cabinet's measures to protect government's stake
The Cabinet's measures are aimed at protecting the government's 49% stake in Vodafone Idea, ensuring orderly repayment of dues, maintaining a competitive telecom market, and safeguarding the interests consumers. However, there is no clarity on whether there will be interest on penalties, or will that be waived off. Vodafone Idea has more than 18,000 employees in India and serves roughly 198 million subscribers across the country.
Waiver request
Vodafone Idea's plea for waiver of penalty and interest
In September, Vodafone Idea had sought a waiver of penalty and interest on an AGR demand of ₹9,450 crore raised by the Department of Telecommunications (DoT). The company argued that a major part of the amount pertained to the pre-FY17 period, which had already been settled by the Supreme Court in 2020. The Supreme Court's decision to allow reassessment and reconciliation of dues was seen as a major relief for Vodafone Idea amid its financial struggles.