- What Is AGR and the AGR Dispute?
- Recent Legal Petitions and Financial Challenges
- Financial Implications of the AGR Dispute
- What Does This Mean for the Telecom Sector?
Vodafone Idea (Vi), the third-largest player in India’s telecom sector, has made the headlines for serious financial trouble and rising uncertainties. On May 19, 2025, the company’s stock crashed over 10% in a single day, wiping out around ₹9,000 crore from the market and leaving investors concerned. But what’s behind this sudden fall, and what’s ahead for Vodafone Idea? Let’s break it down.
The main reason is the ongoing financial issues related to the Adjusted Gross Revenue or AGR dues dispute. AGR basically is the revenue amount on which telecom companies are expected to pay fees and taxes to the government.
Vodafone Idea, along with Bharti Airtel and Tata Teleservices, had asked the government to reduce or delay these huge AGR payments. However, their requests were rejected, marking a big setback for these companies.
What Is AGR and the AGR Dispute?
Adjusted Gross Revenue (AGR) is the base of revenue on which telecom companies pay license fees (8%) and spectrum usage charges (3-5%) to the Department of Telecommunications (DoT). In October 2019, the Supreme Court expanded the definition of AGR and included all revenues earned by telecom companies, including non-core income like rent from infrastructure and interest, which massively increased the dues for companies in the sector like Vodafone Idea and Bharti Airtel.
Following this move, the total dues that were expected to be paid by the telecom industry to DoT were reported at over ₹1.47 lakh crore. The court set a repayment timeline of 10 years and rejected telecom companies’ requests for longer periods or reductions in the amount paid.
Recent Legal Petitions and Financial Challenges
During September 2024, Vodafone Idea, Bharti Airtel, and others filed petitions in the court seeking relief from the changes in AGR, but the court rejected these petitions. Now, the four-year moratorium on AGR dues (allowed in 2021) is about to end in September 2025.
On May 13, 2025, Vodafone Idea filed a fresh petition in the Supreme Court for the waiver of ₹30,000 crore in penalties and interest. The representative of Vi cited that the company may not be able to survive beyond FY26 without financial support, as it doesn’t have the ability to pay the AGR installment of ₹18,000 crore due in March 2026.
Later on May 17, 2025, Bharti Airtel and Bharti Hexacom also filed a similar petition for relief from ₹34,745 crore in AGR dues.
In total, the DoT demanded over ₹1.47 lakh crore relating to AGR, including principal dues, penalties, interest, and interest on penalties. Notably, close to 75% of this amount is related only to interest and penalties.
Financial Implications of the AGR Dispute
Vodafone Idea: The company owes around ₹83,400 crore in AGR dues, including ₹12,797 crore in principal, ₹28,294 crore in interest, ₹6,012 crore in penalties, and ₹11,151 crore in interest on penalties. It has asked a relief for nearly ₹45,000 crore in interest, penalties, and interest on penalties. Vi’s share price dropped around 12% to a day’s low of ₹6.48 following the news.
Bharti Airtel: Has a total AGR liability of ₹43,980 crore, including ₹9,235 crore in principal, ₹21,850 crore in interest, ₹3,995 crore in penalties, and ₹8,900 crore in interest on penalties, and it has asked for a relief of ₹34,745 crore.
Tata Teleservices: The company also filed a petition for a waiver of AGR dues. Tata Teleservices estimated that it owes ₹2,197 crore, while the DoT has demanded ₹16,798 crore.
After the rejection of petitions filed by these companies, they will have to keep paying these large amounts, which is expected to impact their financials heavily. Vodafone Idea has even warned that without help from the government, it might not be able to continue its business beyond FY26.
What Does This Mean for the Telecom Sector?
The Supreme Court’s decision reflects that the government is serious about collecting the AGR dues, which is a huge setback for the involved companies, especially for Vodafone Idea, as the company is in financial trouble and might not be able to survive for long.
Vodafone Idea has been bleeding losses for a long time. During Q3 FY25, it booked a net loss of ₹6,609 crore and the operating revenue of ₹11,117 crore. The AGR payment dues of ₹18,000 crore, which it needs to pay by March 2026, are approximately 150% of its revenue generated in Q3, highlighting the severe financial strain.
With Vodafone Idea struggling to survive, the Indian telecom sector could become more of a duopoly, dominated by Reliance Jio and Bharti Airtel, who are already the top two players with a collective market share of around 74%, as of March 2025. If Vi fails to recover, it could reduce competition, potentially leading to higher prices and fewer choices for consumers in the long run.
Also read: Bharti Airtel Q4 Profit Soars 503% to ₹12,476 Cr on One-Time Tax Gain; Revenue Up 28%
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