Vodafone Idea on the brink after Supreme Court’s AGR verdict

Vi has a total debt of ₹1.7 lakh crore of which it has to pay ₹83,000 crore in AGR dues.
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ANUSHREE FADNAVIS

The Supreme Court of India’s dismissal of telecom operators’ plea to waive interest and penalty components of adjusted gross revenue (AGR) dues has dealt a severe blow to Vodafone Idea, threatening its ability to remain operational.

The telecom operator had acknowledged in its application to the top court that it will not be able to continue operations without financial support. Vi has a total debt of ₹1.7 lakh crore of which it has to pay ₹83,000 crore in AGR dues. Under a deferred payment scheme, Vi has to pay annual AGR payments of ₹18,000 crore starting FY26, which is nearly twice its current operational cash generation of ₹9,200 crore. While banks have refused to issue any fresh loans to the operator, the government has also said that it will not offer any more financial aid after converting debt worth ₹36,950 crore to equity.

Subhendu Pattnaik, Chief Marketing Officer, Covasant, said, “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,” he said, adding that it was unlikely that the company attracts any new investor considering Vi’s mammoth debt.

Vi’s promoter group had infused ₹1,980 crore in December 2024 and in April of the same year, the company completed a follow-on public offer, raising ₹18,000 crore. GQG had taken nearly 26 per cent of total shares allocated to anchor investors at the price band of ₹10-11. On Monday, Vi’s shares crashed nearly 10 per cent to close at ₹6.73 per share on BSE.

‘Do or die situation’

Ashutosh Sharma, Vice-President and Research Director at Forrester, said there was not much left for the company to do. “I don’t know what else Vi can do. It ( SC application) was a do or die situation. The waiver would have helped the company so this is a huge blow,” said Sharma.

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.

Other experts said 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.

Vi last quarterly performance

In its February quarter, Vi narrowed its net loss by 5.3 per cent to ₹6,609.3 crore, as compared to the loss of ₹6,985.9 crore incurred in the same quarter last year. Revenue from operations grew 4 per cent annually to ₹11,117.3 crore. Capex spend for the quarter was ₹3,210 crore with the full year expected capex of around ₹10,000 crore whereas Airtel India capex for the year was about ₹30,270 crores.