Andhra Pradesh Govt Signs MoU with Vodafone Idea Business for MSME Digital Transformation

“ABG has articulated strong support to ensure timely debt servicing and continuity of operations of VIL. In the past, the group has supported VIL during periods of stress by ensuring timely debt servicing and creditor payments from VIL through equity infusions and other financing,” the report added.

“The recent announcement of the group committing subscription of share warrants aggregating to Rs 4,730 crore underscore the commitment of the group,” it added.

“The ratings also reflect VIL’s meaningful market position in the Indian mobile services market with a subscriber market share of 15.68 percent as of March 2026 (based on data from TRAI) and its presence across all the 22 telecom circles. While the company has been losing subscribers and market share in the past, the subscriber loss is expected to be arrested on the back of planned investments over the next 2-3 fiscals and resultant improvement in service levels.”

“Underinvestment in capex to expand 4G network coverage has led to fall in subscriber base from 29.1 crore at the end of March 2020 to 19.8 crore at the end of March 2025. However, the subscriber loss has reduced significantly during fiscal 2026 with net additions in the last two months of fiscal 2026. VIL commenced a phased capital expenditure program to expand 4G coverage and roll out 5G services across priority circles to address the higher subscriber churn. The company has incurred capex of around Rs 18,000 crore cumulatively in fiscals 2025 and 2026 funded largely through equity proceeds. VIL has raised equity of around Rs 26,000 crore since March 2024, including Rs 18,000 crore through a follow-on public offering (FPO) and balance via promoter contribution and conversion of vendors dues to equity.”

Vi ARPU and Network Expansion

“The capex undertaken by VIL led to increase in its 4G network coverage from around 77 percent in March 2024 to nearly 86 percent in March 2026 leading to arrest in decline in subscriber base from quarterly run rate of around 4 million to around 0.1 million in the last quarter of fiscal 2026. Improvement in network coverage and quality should reduce the subscriber churn and retain high value customers leading to growth in subscriber base and improvement in subscriber mix. Better operating performance is also being driven by increase in blended average revenue per user (ARPU) to Rs. 174 in the last quarter of fiscal 2026 from Rs. 146 in the last quarter of fiscal 2024 owing to change in subscriber mix and tariff hikes taken in July 2024. ARPU is expected to improve, led by conversion from 2G customers to 4G customers, voice-only plans to data plans, rising data usage and future tariff hikes, thereby aiding cash flow generation,” it said.

CRISIL Ratings has also taken note of the recent announcement by the Department of Telecommunications (DoT) regarding the resolution of AGR dues.

AGR Relief and Government Equity Conversion Ease Cash Flow Pressure

“The liabilities pertaining to AGR have reduced to Rs 64,046 crore from Rs 87,695 crore with minimal repayments till fiscal 2035. This should ease pressure on cash flow position over the near to medium term. Earlier, the Government of India provided relief to VIL by conversion of spectrum dues of Rs 36,950 crore in March 2025 and Rs 16,133 crore in February 2023 to equity. While the government currently owns 49 percent shareholding, it is not classified as promoter, and it does not have a representative on the board. Post conversion of spectrum dues to equity, ABG’s shareholding has come down to 9.57 percent. Despite that, the economic incentive and importance of VIL in the group’s strategy for the future remains significant, given the substantial economic benefit from VIL in the long run. Also, with the recent announcement on equity infusion, ABG’s share will increase to nearly 13 percent.”