Vodafone Idea shares surge 6% as Centre mulls AGR relief
What's the story
Vodafone Idea's shares jumped over 6% in early trade on Tuesday. The surge comes after reports that the central government is considering providing relief on the telecom giant's outstanding regulatory dues of ₹84,000 crore. The company's shares were trading at ₹6.98 apiece at the time of writing this article, up by 6.56%.
Relief options
Government considering several strategies to ease Vi's financial burden
The government, which is the largest shareholder in Vodafone Idea, is said to be considering several strategies to ease the financial burden. These include extending the repayment period for AGR dues from six years to 20 and changing the interest calculation method from compound interest to simple interest on the outstanding amount. This could significantly reduce Vi's annual payment burden.
Token payment
Relief through combination of options
Another possible strategy is to levy a token amount of ₹1,000-1,500 crore annually toward part payment of these dues. This would continue until a final decision is made on the broader AGR issue. The government is also considering other creative proposals and plans to offer relief through one or a combination of options.
Stake increase
Government's stake in Vodafone Idea rises to 48.99%
Earlier this year, the government had announced its decision to convert outstanding spectrum dues into equity shares. After this conversion, the Government of India's stake in Vodafone Idea rose from 22.6% to 48.99%. "The promoters will continue to have operational control of the company," said the firm in a filing with bourses. However, earlier this month, it was reported that the government has no plans for further conversions of arrears into equity.
Financial hurdles
Vi won't survive without any relief on AGR dues
Vodafone Idea has been struggling with its AGR dues, which amount to ₹83,400 crore as of March 2025. The company needs to pay annual installments starting March 2026 until March FY31. However, the government fears that without any relief on these dues, the loss-making telco won't survive. Its cash and bank balance stood at ₹9,930 crore at the end of March.