Vodafone Idea Limited (VIL), the third-largest telecom operator in India, desperately needs government help. The government has put a huge debt on the shoulders of Vodafone Idea. The debt we are talking about is the adjusted gross revenue (AGR) dues. The AGR dues of the telco are more than what it can comfortably pay, with more debt from banks and vendors on the horizon. The telecom operator had sought government help, and in the last few years, the center has extended plenty of support.
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One of the major things that government did was take equity in the company against the pending dues. This not only lowered dues of the telco, but also gave it some breathing room. The stake of the government in Vi is currently the largest, and very close to 50%. There’s no intent from the government to turn Vi into a government run company, and thus, it won’t take any further equity in the telco. Along with this, the government doesn’t even want to interfere with the day to day operations and the management of the company.
Vodafone Idea, starting 2026 will need to pay deferred AGR dues in instalments. These instalments, unfortunately, are more than what the telco can afford to pay. The funds Vi raised went into boosting capex (capital expenditure). The plan of the company was simple – raise funds then invest it back into the networks. As for the revenues it was earning, that was supposed to go into taking care of expenses of the company and clearing dues.
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However, the revenues are not at the level where the telco can comfortably pay the AGR instalments and also take care of the operational expenses. On top of all this, the government has also demanded additional AGR dues from Vi and Airtel, a decision which Vi has challenged in the Supreme Court (SC). The SC is yet to give a decision on the matter. Stay tuned for future updates on the hearing.
