Among the options on the table to address adjusted gross revenue (AGR)-related dues is increasing the repayment tenure to 20 years from six now and simultaneously applying a simple interest on the outstanding amount instead of compound interest, or interest on interest, people aware of the details told ET. If such terms indeed apply to Vi, its annual payment burden will shrink significantly, although some are questioning whether telco’s existing cash flows are sufficient to honour even the most generous repayment covenants. Asecond option is to charge a token amount of around Rs 1,000-1,500 crore annually toward part payment of those dues until a final decision is taken on the broader AGR issue, said a person in the know.
“Apart from these two options, some other creative proposals are also being explored, and the relief may be given by either one or a combination of options,” said one of the persons cited above, on the condition of anonymity. Another person said the government’s intent is to keep the company afloat. If Vi folds up, New Delhi would be the biggest loser: The Centre is the largest shareholder with a 49% stake, and a majority of the outstanding dues would come to the treasury.
“Since the known or existing options (such as waiving the interest and penalties) are not working out, something new has to be forged. But whatever option is finalised, it would be legally tenable,” said the second person.
Vi has outstanding AGR dues to the tune of Rs 83,400 crore as of March 2025, annual payment instalments of which fall due starting March, 2026, and need to be paid until March, FY31. As things stand, the loss-making telco needs to pay Rs 18,064 crore by March of this financial year. At the end of March, its cash and bank balance totalled Rs 9,930 crore, and the government fears that without any relief on the AGR dues, the company won’t survive.
INTEREST COST SAVINGS
Currently, telcos such as Vi and Bharti Airtel, which are affected by the 2021 AGR ruling of the Supreme Court, pay around 29-30% compound interest annually on the outstanding dues. If the same is converted into simple interest of 8-10%, it would reduce the overall outgo and accumulation for the coming years.
“Vi can save over Rs 16,000 crore in interest cost after the conversion if the decision is implemented prospectively. The savings will be much higher if the decision is implemented retrospectively,” said an expert. Vi, for example, must pay Rs 18,064 crore by March 31 of every year until 2031. But in case the interest is converted into simple interest of 8-10%, the annual instalment would be around Rs 15,000 crore.
“But since the company won’t be able to pay even that amount given its cash flows, the instalments could be extended to 20 years. In such a case, the annual outgo could be lower,” said the first person cited above. In its scenario-building for Vi, the government estimates that if the company is required to pay the full Rs 18,064 crore instalment due by end-FY26, it would not have funds to meet the liability in FY27 and thus may go bankrupt.
SURVIVAL AT STAKE
And even if the annual instalments are reduced to Rs 6,000-8,500 crore each by extending the payment period, it would still not bring any tangible benefits and, given the telco’s cash flows, it may not meet the liabilities beyond 2028-29.
To be sure, the government had earlier converted Rs 36,950 crore of spectrum auction arrears into equity in March, and became the largest shareholder in the telco, with a 49% stake. These arrears were related to pre-2021 spectrum auctions. The company still needs to pay the instalments for post-2021 auctions.
The company had told the government that it was not able to pay both the AGR and spectrum dues after the end of a four-year moratorium this fiscal. Its annual payments before the equity conversion were more than Rs 30,500 crore for FY26, but even after the equity conversion, the company needs to pay over Rs 20,000 crore in annual instalments, including both AGR and spectrum auction dues.
The telco has been trying to raise Rs 20,000- 22,000 crore from its lenders, which have sought more clarity around the AGR dues before extending credit. Earlier this month, the company’s board also approved raising up to Rs 20,000 crore more via various instruments.
