Vodafone Idea (VIL), India’s beleaguered telecom operator, has sounded a grave warning to the government, stating that it will be forced to shut operations beyond FY26 unless immediate relief is provided on its Adjusted Gross Revenue (AGR) dues. In a letter to the Department of Telecommunications (DoT), VIL CEO Akshaya Moondra urged intervention, stressing that without government support, the company’s ongoing funding discussions with banks would collapse, and its capital investment cycle would stall. VIL also cautioned that failure to act could disrupt services to over 200 million users and cause irreparable harm to the broader telecom ecosystem.
Urgent Plea for Relief Amid Mounting Liabilities
In a letter dated April 17, 2025, Vodafone Idea formally appealed to the Telecom Department for urgent support concerning its AGR liabilities, warning that without timely government intervention, it may cease operations after FY26. CEO Akshaya Moondra asserted that the continuation of VIL’s business is heavily contingent on the government's response, particularly concerning the pending AGR dues and liquidity support.
Moondra highlighted that the current AGR burden has stalled ongoing debt negotiations with banks, delaying critical funding needed for network investments and operational improvements. The result, he warned, would be a stalled capex cycle, leading to further subscriber losses, deteriorating EBITDA performance, and ultimately, insolvency.
AGR Dues and Supreme Court Petition
VIL’s plea coincides with its legal battle in the Supreme Court, where the company has filed a fresh petition seeking a waiver of approximately Rs. 30,000 crore in AGR dues. Represented by senior advocate Mukul Rohatgi, the telco has urged the apex court to expedite its hearing. A bench headed by Chief Justice B.R. Gavai is expected to hear the matter on May 19, 2025.
In its appeal to the DoT, VIL emphasized that without relief, it may be forced to initiate proceedings under the National Company Law Tribunal (NCLT), a move that could severely erode the value of its assets, including spectrum holdings, and disrupt telecom services nationwide.
High Stakes: Public Impact and Economic Risk
Vodafone Idea underlined the systemic implications of its potential collapse. An estimated 200 million users could face immediate service disruption, triggering mass port-outs and creating pressure on the remaining operators. Moreover, the telecom firm emphasized its role in supporting direct and indirect employment for approximately 30,000 individuals and delivering value to over six million shareholders.
The telco further pointed out that the government, now holding a 49% equity stake in VIL following a dues-to-equity conversion, stands to lose the most in case the company is forced to shutter operations. A transition to a duopoly in the Indian telecom sector would not only undermine consumer choice but also diminish the competitiveness and financial viability of future spectrum auctions—long a critical source of state revenue.
Proposed Framework for AGR and Spectrum Relief
In its submission, VIL proposed a structured settlement of AGR dues and relief on spectrum liabilities. The company requested the government to:
- Accept the principal AGR demand of Rs. 17,213 crore (as of FY19) as final.
- Waive 100% of accrued interest and penalties.
- Adjust previous payments made in 2020 and the 2023 dues-to-equity conversion.
- Recognize the remaining AGR liability as Rs. 7,852 crore, payable over 20 years, with a five-year moratorium and no further interest.
- Begin payments of Rs. 714 crore annually from FY31 through FY41.
For spectrum dues, VIL sought:
- A one-year extension for payments related to spectrum acquired prior to the 2021 auctions.
- A five-year moratorium on spectrum instalments falling due between FY28 and FY32.
A Final Stand for Survival
Vodafone Idea’s appeal is more than a financial restructuring request—it is a desperate bid for survival. While acknowledging the support provided by the government’s 2021 telecom reforms, including the recent equity conversion, the company maintains that the AGR judgment has placed an unsustainable burden on its financials. Without immediate resolution, VIL warns that the entire value created over the past year—through fundraisings, operational investments, and government backing—could be wiped out.
This situation presents a critical policy test for the government, which has long espoused a three-player market as optimal for healthy competition. Allowing a transition to a duopoly would mark a structural shift with far-reaching consequences. As the May 19 court date looms, the fate of India’s third-largest private telecom provider hangs precariously in the balance.
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