Vodafone Idea Warns of Operational Challenges Beyond FY26 Without Government Support on AGR

Vodafone Idea has informed the Telecom Department that without timely government intervention regarding adjusted gross revenue (AGR), it cannot sustain operations beyond FY26. The company highlighted that bank funding discussions would stall without this support. Vodafone Idea's CEO, Akshaya Moondra, emphasised in a letter to the department that the absence of assistance would lead to irreversible consequences.

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The Supreme Court has agreed to hear Vodafone Idea's plea for a waiver of approximately Rs 30,000 crore in AGR dues. Senior lawyer Mukul Rohatgi, representing the telecom firm, stressed the urgency of the matter. The court is expected to address this plea on May 19. Meanwhile, Vodafone Idea warned that without bank debt disbursement, planned investments would not materialise, stalling operational improvements.

Impact on Subscribers and Employment

Vodafone Idea stated that if it fails to pay AGR dues, it may have to initiate proceedings under the National Company Law Tribunal (NCLT). This could devalue network and spectrum assets and disrupt services even briefly. The company noted that about 200 million users might need to switch providers if services are interrupted. Timely support would benefit the public and economy by ensuring service continuity for these subscribers.

The company also highlighted that continued operations would secure direct and indirect employment for around 30,000 people and offer positive returns to over 6 million shareholders. Vodafone Idea pointed out that the government holds a 49% stake in the company, making it the largest stakeholder. Without urgent intervention, the government stands to lose significantly if Vodafone Idea cannot continue operations due to AGR issues.

Financial Implications and Government Support

Vodafone Idea argued that without government backing, its EBITDA would decline due to subscriber loss from halted capex investments. This would lead to defaulting on AGR instalment payments by March 2026. The company warned that without support, the government's stake value could diminish completely. The government has consistently supported a market with three private players; reducing it to two would harm competition and consumer choice.

The telecom operator acknowledged past government support through the 2021 reform package and recent dues-to-equity conversion. However, it stated that the AGR judgment severely damaged its business and financial health. Addressing the AGR liability is crucial for survival. Vodafone Idea requested liquidity support through spectrum moratoriums and extensions as part of resolving this issue.

Proposed Solutions for AGR Dues

Vodafone Idea proposed considering Rs 17,213 crore as the final principal demand up to FY19 and requested a full waiver on interest charges and penalties. After accounting for payments made in 2020 and AGR dues conversion in 2023, remaining dues by March 2025 would be Rs 7,852 crore post-waivers. The company suggested spreading payments over 20 years with no further interest accruals during a five-year moratorium until FY30.

The proposal included extending spectrum payment periods by one year for spectrum acquired before the 2021 auction. It also sought a five-year moratorium on spectrum instalment payments from FY28 to FY32. These measures aim to provide financial relief and ensure continued operations amidst ongoing challenges.

With inputs from PTI