AGR Relief Announced, But Shares Sink Nearly 20% Despite Govt Support
Shares of telecom company Vodafone Idea Ltd saw a sharp sell-off on Wednesday, December 31. The stock fell nearly 20% from its intraday high during trading. It fell below its FPO price of ₹11 at the day’s low. The decline came at a time when news of a major AGR relief for the company came out.
Vodafone Idea share price was trading at Rs 10.25, down 15.01% by 2.40 pm. While it had made an intraday high of 12.80 before the government’s decision.
According to sources, the Union Cabinet has approved the AGR relief package for Vodafone Idea. A five-year moratorium on AGR payments has been given under this package. This is expected to give immediate relief to the company from cash pressure.
As part of the relief measures, AGR dues of Vodafone Idea totaling ₹87,695 crore have been frozen for the time being. This has come as a major relief to the company’s already strained balance sheet.
Payment will be made between FY32 to FY41: As per available information, payment of frozen AGR dues of ₹87,695 crore will be rescheduled between FY32 and FY41. These dues will be reassessed based on the audit reports of the Department of Telecommunications.
However, AGR arrears related to FY18 and FY19 will have to be paid by Vodafone Idea over the next five years.
Already heavy AGR burden: Vodafone Idea has been grappling with huge arrears crisis for a long time. The total AGR liability on the company is said to be around ₹83,400 crore. Banks are reluctant to lend due to weak balance sheets. The company has repeatedly stated that timely funding support is critical to its existence.
Vodafone Idea has around 19.8 crore subscribers across the country. The company employs more than 18,000 people.
Relief was obtained from the Supreme Court before: A few weeks ago, the Supreme Court allowed the government to re-examine and reconcile all dues of Vodafone Idea till FY17. It also includes interest and penalties. This decision was considered a big relief for the company.
A waiver of ₹9,450 crore was sought in September: In September, Vodafone Idea had sought waiver of interest and penalty on AGR demand of ₹9,450 crore from DoT. The company said that the bulk of this amount relates to the period before FY17, which has already been settled by the Supreme Court in 2020.
Of this demand, ₹2,774 crore was post-merger liability, while ₹5,675 crore was related to pre-merger Vodafone Group.
The government became the largest shareholder: In March 2025, the government converted Vodafone Idea’s ₹36,950 crore worth of debt into equity, increasing its stake to around 49%. Earlier also in 2023, the government had acquired a 33% stake in the company in lieu of statutory dues of over ₹16,000 crore.
Despite the relief, why are investors worried? Despite the big relief on AGR, the sharp drop in the stock shows that investors are still worried about the future of Vodafone Idea. Specifically, regarding long-term financial position, funding arrangements and cash flow. The market’s eyes are now on how quickly and how firmly it can handle the relief of the company.
