Vodafone Idea share price surges over 4% on Thursday, January 1; here is all you need to know

Under the revised agreement, Vodafone Group promoters will release ₹2,307 crore over the next 12 months for Vodafone Idea as per the terms agreed in the amendment agreement.

Vodafone Group has also set aside its 328 crore shares held in Vi for Vi's benefit.

Vi will have the right to instruct Vodafone to sell these shares, in one or more tranches, with any cash proceeds being transferred to Vi.

As of the date of the amendment agreement, the market value of the earmarked shares stands at ₹3,529 crore, the Vi filing said.

CLAM details

A Contingent Liability Adjustment Mechanism (CLAM) was entered into between Vodafone Group and Vodafone Idea (Vi) at the time of the 2017 merger agreement between Vodafone India and Idea Cellular and covers pre-merger contingent liabilities in relation to legal, regulatory, tax, and other matters of the two merging parties.

Under the CLAM, Vodafone's maximum exposure was capped at ₹8,369 crore at the time of the merger, and taking into account payments already made, the reduced exposure was capped at ₹6,394 crore, and the deadline for the pact after an extension was December 31, 2025.

However, consequent to the amended terms of the IA (Implementation Agreement) signed by the two firms, a sum of approximately ₹5,836 crore is now receivable by Vi, according to the filing.

AGR dues: Latest updates

According to a PTI report, the government on Wednesday approved a major relief package for Vodafone Idea, freezing its outstanding AGR dues, approving a five-year moratorium on payment, and clearing the way for reassessment of the capped statutory charge – giving a critical lifeline to the beleaguered telco.

The relief measures approved by the Union Cabinet aim to protect the interest of the government (which has about a 48.9% stake in the telco), enable orderly payment of dues to the Centre by way of spectrum auction charges and AGR dues, ensure competition in the sector and safeguard the interests of 20 crore consumers of Vodafone Idea, PTI reported, citing sources.

The Cabinet, headed by Prime Minister Narendra Modi, agreed to freeze AGR dues of Vodafone Idea at ₹87,695 crore, which the struggling company now has to start paying from the 2031-32 fiscal year and clear by 2040-41, the PTI report added.

The frozen dues will be reassessed by the telecom department based on 'deduction verification guidelines' of 2020 and audit reports, the PTI report said, adding that the outcome will be decided by a government-appointed committee and be binding on both parties.

What are AGR dues?

AGR dues refer to payments owed by telecom companies to the government based on Adjusted Gross Revenue (AGR). It is the revenue on which telecom operators must pay licence fees and spectrum usage charges.

As per the relief package, AGR dues for FY 2017-18 and FY 2018-19, which were finalised based on the Supreme Court order of September 2020, will now have to be paid over the 2025-26 to 2030-31 fiscal years without any change, they said.

The PTI report said this amount works out to roughly ₹120 crore per annum and between ₹700 and ₹800 crore over the six years.

Responding to a clarification sought by BSE on the issue, Vodafone Idea said in a filing: "We have not received any communication from the government in relation to the above-reported matter. As and when there is any development which requires disclosure, we will do the needful."