Vodafone Idea warns of insolvency by FY26 without government aid for AGR dues, risking 200M users. Read the latest on theinterviewtimes.com.
New Delhi, India – Vodafone Idea (VI), one of India’s leading telecom operators, has issued a dire warning to the Department of Telecommunications (DoT), stating it may not survive beyond FY26 without urgent government support. The cash-strapped company, burdened by a staggering ₹2.27 lakh crore in debt, is grappling with Adjusted Gross Revenue (AGR) and spectrum liabilities that threaten its operations, potentially impacting 200 million customers.
A Plea for Survival
In a letter dated April 17, 2025, VI’s CEO, Akshaya Moondra, informed the DoT that without government intervention on AGR dues, the company will be unable to secure bank funding, pushing it toward insolvency. VI has cautioned that failure to act could lead to job losses, service disruptions, and a complete loss of the government’s 49% equity stake, valued at zero, with no recovery of ₹1.18 lakh crore in spectrum dues.
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Supreme Court Appeal and Financial Strain
VI has escalated its plea to the Supreme Court, requesting a waiver of over ₹30,000–₹45,000 crore in AGR dues. The case, represented by senior lawyer Mukul Rohatgi, is set for an urgent hearing on May 19, 2025. The company argues that the 2021 telecom reforms, including a four-year moratorium on AGR and spectrum payments, and recent dues-to-equity conversions have not alleviated the “grave damage” caused by the AGR judgment. VI’s total debt as of December 2024 includes ₹77,000 crore in AGR liabilities and ₹1.4 lakh crore in spectrum dues.
Government’s Role and Past Support
The government has already provided significant relief, converting ₹36,950 crore of spectrum dues into equity in March 2025, raising its stake to 48.99%. This reduced VI’s FY26 spectrum payments to ₹500 crore, but the company still faces ₹29,000 crore in combined AGR and spectrum dues in the latter half of FY26. Communications Minister Jyotiraditya Scindia has emphasized that the government will not increase its stake beyond 49% to avoid turning VI into a public sector undertaking, urging the company to raise funds independently.
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Impact on India’s Telecom Sector
VI’s potential collapse could disrupt India’s telecom market, reducing competition and affecting millions of subscribers. Despite a ₹26,000 crore equity infusion and promoter contributions of ₹1,980 crore in December 2024, banks remain reluctant to lend, citing VI’s precarious financial health. The company’s counsel has stressed that its survival is critical for maintaining a competitive telecom landscape.
What Lies Ahead?
As the Supreme Court hearing approaches, all eyes are on whether the government will offer further relief or if VI will be forced to approach the National Company Law Tribunal (NCLT) for insolvency proceedings. The outcome will not only determine VI’s fate but also shape the future of India’s telecom industry.
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