The Union Cabinet has approved a relief package for Vodafone Idea (Vi), the debt-ridden telecom operator. The package includes freezing the adjusted gross revenue (AGR) dues at Rs 87,695 crore and rescheduling payments from FY32 to FY41.

The approved measures offer a significant breather to Vodafone Idea, which has been struggling with massive debt. The company's financial difficulties include outstanding AGR dues of approximately ₹83,400 crore and total debt exceeding ₹2 lakh crore.

The government's decision comes after a long period of deliberation and is viewed as a critical intervention to prevent a potential collapse of the telecom operator. Vodafone Idea has repeatedly warned that it may not survive without financial support, as banks have been hesitant to lend additional funds given its stressed financial situation.

The approved relief package includes a five-year moratorium and freezes Vodafone Idea's AGR dues as of December 31, which will be reassessed by the Department of Telecommunications (DoT). As part of the package, the government will freeze Vodafone Idea's AGR dues without any interest until FY32.

Shares of Vodafone Idea jumped on news of the potential government relief package. The company has been losing customers and faces a significant subscriber decline. Vodafone Idea aims to raise funds by November 2025 to expand its 4G and 5G networks and prevent losing customers to rivals.

Earlier this year, Vodafone Idea's former CEO urged the DoT to settle the company's dues at Rs 17,213 crore as principal, while seeking a complete waiver on penalties and interest. He also stressed that unless the moratorium is extended until FY30, banks would remain hesitant to lend.