The bench clarified that it would not prevent any government-led intervention, stating, “If the government wants to help you (the petitioners), we are not coming in your way.”
Vodafone Idea had cited severe cash flow issues while seeking relief from the top court. The company acknowledged in its application that it would be unable to continue operations without financial support. It contended that the relief sought was crucial to protect its viability, preserve market competition, and safeguard consumer interests.
Let’s now take a look at what analysts, brokerages, and industry experts have said about the implications of the verdict on Vodafone Idea’s future.
“This was the last straw on the camel’s back. Vi can still try to restructure more debt to equity but they have already done that in the past. It was unlikely that the company attracts any new investor considering Vi’s mammoth debt,” said Subhendu Pattnaik, Chief Marketing Officer at Covasant, as quoted in a Hindu BusinessLine report dated May 19.
Vi has a total debt of Rs 1.7 lakh crore, of which it has to pay Rs 83,000 crore in AGR dues. Under a deferred payment scheme, Vi has to pay annual AGR payments of Rs 18,000 crore starting in FY26—nearly twice its current operational cash generation of Rs 9,200 crore.
As previously reported, banks have refused to issue fresh loans to the operator, and the government has stated it will not provide further financial aid after converting Rs 36,950 crore of debt into equity. In an earlier interview, the Union Minister of Communications made it clear that the government is not willing to convert any more dues into equity.
Vi’s promoter group infused Rs 1,980 crore in December 2024, and in April of the same year, the company completed a follow-on public offer (FPO), raising Rs 18,000 crore.
Also Read: Vodafone Idea Must Clear Government Dues, Says Minister
2. inGovern
Shriram Subramanian, Founder of inGovern, said the company will now have to move for voluntary bankruptcy. “Shareholders of the company have said they are not going to invest any new funds. If the government had agreed to waive the AGR dues that could have helped the company, but the court also does not support that idea. Both parties have done all they can,” said Subramanian, according to the report.
Other experts noted that putting the company through insolvency proceedings would yield little recovery, as its key assets—subscribers, spectrum, and infrastructure—offer limited salvage value. Spectrum can be reacquired in auctions, subscribers can switch operators via number portability, and most infrastructure is leased rather than owned.
Also Read: Bharti Airtel Approaches Supreme Court Seeking AGR Relief
3. Former Bharti Airtel CEO
In an interaction with CNBC-TV18 on Tuesday, former Bharti Airtel CEO Sanjay Kapoor described Vodafone Idea’s situation as ‘precarious’ and added that “it is unlikely that the government would want to cross the 51 percent shareholding threshold in Vodafone Idea, as they already have a BSNL and MTNL to take care off.”
When asked whether the National Company Law Tribunal (NCLT) might be the endgame for Vodafone Idea, Kapoor reportedly said: “The company had already warned that it will not be able to continue beyond the current financial year 2026 if it does not get any further support from the government.”
“The fact is that today, the two leading operators are nibbling into the market share of VIL irrespective. So when they are growing on price, they are also growing on the market share gains that they have from VIL. So why would they invest and buy such a company? So I don’t see anyone of those two going ahead and merge it with us. And we have seen in the past that Vodafone and Idea’s merger did not click,” Kapoor said, responding to a question about whether Reliance Jio or Bharti Airtel might consider merging Vodafone Idea with their operations.
The former Bharti Airtel CEO reportedly explained further that Vodafone Idea would have knocked on the doors on every operator and investor globally, whether minority or majority, but there has been no traction on that front. “Whether minority or majority. I’m sure they would have been open to all, but we have not seen anybody come. The American operators have been here, they left and went away. So everybody knows the position,” Kapoor reportedly said.
“The world over now, the third operator and fourth operator, because of the more frequent capital cycles, are becoming lesser competitive. Now, you invest into a third operator, even if it’s a large country like India, your odds are against you. Because the two large operators of the market have taken the pole position. So how do you compete with them?” Kapoor said, as mentioned in the report.
“The chances of any international operator coming in and pumping money into a third operator who is losing market share seems a little tricky to me,” he reportedly added.
4. Burgeon Law
“This effectively puts the onus on the government to decide whether to extend further relief to the telecom sector, which continues to reel under the financial burden of massive AGR liabilities,” said Ketan Mukhija, senior partner at Burgeon Law, according to a Moneycontrol report dated May 20, 2025. With the court’s position now clear, the Centre has the legal room to revisit its relief approach, he added.
The ruling definitively ends telcos’ attempts to challenge interest and penalty components of the AGR dues through the court process, the report said.
To DoT: Vodafone Idea Says It Can’t Operate Beyond FY 2025–26 as Banks Refuse Loans
5. Little & Co
According to Ajay Khatlawala, managing partner at Little & Co,the executive branch must now take any further steps, as legal remedies have been exhausted. “Telecom companies must now seek support by highlighting that their difficulties are systemic in nature and require comprehensive regulatory and fiscal solutions to ensure the industry’s sustainability and continued competitiveness,” Khatlawala reportedly said.
According to the telcos’ self-assessment, total AGR dues stand at approximately USD 1.57 billion for Bharti and USD 2.59 billion for Vodafone Idea. Correcting calculation errors could significantly reduce the currently reported AGR liabilities of around USD 4.65 billion and USD 9.16 billion, respectively.
6. Citi Research
In a May 20 note titled Dismissal of AGR Petition – Devil is in the Details?, Citi Research said it was “surprising” that Vodafone Idea and then Bharti Airtel had moved fresh petitions at this stage. “This makes us wonder if this is actually the outcome that the companies and government were perhaps hoping for and whether this now paves the way for the government to provide AGR relief while staying compliant with Court orders,” the report stated.
7. IIFL Capital
IIFL Capital, in a separate note, said the government still has several options. The Department of Telecommunications can file a modification plea in the Supreme Court to obtain a formal order permitting such relief. This could allow the government to waive 50 percent of the interest and 100 percent of the penalties and interest on penalties related to AGR dues—measures reportedly under consideration earlier.
Additionally, the government could extend the AGR payment timeline, providing cash flow relief to telecom operators, and also consider correcting errors in AGR calculations.
“If the government waives interest, penalties, and interest on penalties, our estimates suggest that Bharti Airtel’s and Vodafone Idea’s annual cash payouts would decline by approximately USD 900 million and USD 1.17 billion, respectively. Further, if the AGR payment deadline is extended from FY31 to FY51, the annual cash outflows for Bharti and Vi between FY26 and FY31 could fall by USD 578 million and USD 1.13 billion, respectively,” IIFL noted.
“Even with potential relief, Vi’s operating cash flow before interest payments—estimated at USD 1.48 billion in FY26 and USD 1.89 billion in FY27—would be insufficient to meet regulatory payouts of USD 1.07 billion and USD 1.34 billion in those respective years, in addition to interest costs and capital expenditures. The government may ultimately need to either extend the moratorium or increase its equity stake in Vodafone Idea,” IIFL reportedly said.
8. Industry Sources
To keep Vi afloat, the Department of Telecommunications (DoT) is likely to convert another tranche of dues—potentially Rs 40,000 crore—into equity, pushing its stake to 75 percent, Business World reported on May 20, citing industry sources. This would further dilute promoter holdings while maintaining their operational control, raising questions about accountability.
“The government is trapped,” a telecom analyst was quoted as saying in the report. “Vi’s collapse would spark a duopoly between Reliance Jio and Bharti Airtel, disrupt 200 million subscribers, and trigger job losses for 20,000 employees. But pouring more public money into a company with negative net worth is financial insanity.” The alternative would be to push Vi to the National Company Law Tribunal (NCLT) for insolvency.
The equity conversion, hailed as a lifeline, is a mirage. Despite the government holding a near-majority stake, it exercises no real operational control. Strategic power remains firmly with the Aditya Birla Group and Vodafone Plc, which hold 9.4 percent and 16 percent, respectively. This arrangement, critics argue, amounts to corporate welfare disguised as economic strategy—shielding promoters while taxpayers bear the burden, the report notes.
The government’s reluctance to let Vi fail stems from a combination of economic concerns and political considerations. Allowing the company to fail could damage India’s reputation as a business-friendly destination, destabilise the banking sector, and trigger public backlash over disrupted telecom services. However, critics argue that Vi is being unfairly favoured. They point out that Reliance Communications was allowed to fail, and Tata Teleservices settled Rs 50,000 crore in dues before merging its mobile operations with Airtel.
“Why is Vi a sacred cow?” asked a financial strategist, as mentioned in the report. “The Birlas and Vodafone are reaping strategic benefits without risking fresh capital, while taxpayers fund a sinking ship.”
To avert immediate collapse, the DoT is expected to convert additional spectrum or AGR dues into equity, potentially raising its stake to 75 percent by FY26. This would require issuing billions more shares, further diluting public shareholders, who number 6 million and are clinging to hopes of a turnaround, the report added.
9. Ambit Capital
A potential decision by the central government to waive interest on unpaid AGR dues, penalties, and interest on penalties could enable Vodafone Idea to raise bank debt. This would allow India’s third-largest telecom carrier to undertake capital expenditure (capex) and retain its nearly 200 million subscribers, according to Ambit Capital.
“The government has consistently maintained its intent to maintain a 3+1 structure in the telecom industry. With the Supreme Court now providing clarity on potential relief, the government has no choice but to act,” the brokerage said in a research note reviewed by ETTelecom.
“Waiver of interest on unpaid AGR dues, penalty and interest on penalty would help the company raise bank debt, giving VI an opportunity to expand its network, carry out capex and hold on to its around 200 million users,” it reportedly said.
Ambit noted that, with the government unwilling to increase its stake in the telco beyond 49 percent and promoters unable to commit additional capital, the conversion of Vi’s dues into equity is an “unviable alternative.”
It said deferring dues would “merely postpone the issue” without resolving it. Should the government choose this route, Vodafone Idea may struggle to secure bank loans essential for funding its growth capex.
“Without AGR relief, our calculation confirms what Vi argued in the SC. Repayment of current statutory dues would lead Vi to run out of its cash reserves by March 2026,” Ambit said, as mentioned in the report. “Thus, supportive action before the payment date of March 2026 is the most likely outcome.”
Ambit Capital estimates that despite tariff hikes in July 2024, Vi’s annualised 3QFY25 cash EBITDA of Rs 9,800 crore isn’t sufficient to pay off Rs 16,900 crore due in FY26.
“In June 2025, Vi will likely receive Rs 64 billion (Rs 6,400 crore) equity funding from Vodafone PLC as an indemnity payment. But the same isn’t sufficient for Vi to raise bank loan funding of Rs 250 billion (Rs 25,000 crore), which is necessary for the company to carry out its target Rs 500-550 billion (Rs 50,000-55,000 crore) FY25-28 capex,” the brokerage added, according to the report.
Also Read: Government Stake in Vodafone Idea Rises to 48.99 Percent After Fresh Equity Allotment
Vodafone Idea and the Telecom Sector
Vodafone Idea, which owes Rs 83,400 crore in AGR dues, had sought a waiver on Rs 45,000 crore related to interest, penalties, and interest on penalties. Bharti Airtel and its subsidiary Bharti Hexacom sought relief on Rs 34,745 crore of their total Rs 43,980 crore liability.
In its May 13 plea, Vodafone Idea warned that without bank funding, it would not be able to function beyond FY2026. “It is humbly submitted that without bank funding, the petitioner company will not be able to operate beyond FY 2025-26, as it does not have the ability to pay AGR instalment of Rs 18,000 crore as per DoT demands due in March 2026,” the company told the Court, according to earlier reports.
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Change log:
May 20: Initial Version
May 21: Added Section 8 with Industry Sources.
May 23: Ambit Capital report added. This is a developing story…
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