The Supreme Court’s (SC) decision to allow the government to reassess Vodafone Idea’s (VI) adjusted gross revenue (AGR) dues without judicial intervention could pave the way for a timely relief—possibly well before the March 26, 2026, deadline.
Analysts said such relief could unlock a fresh equity raise, dilute the government’s 49 percent stake, and open the door for further debt-to-equity conversions, setting off a chain of positive developments for the telecom operator.
“We believe this could have significant positive ramifications for Vodafone Idea and, by extension, for Indus Towers. With a large lump-sum AGR payment due from VI to the government in March 2026, we expect that relief should come well ahead of the deadline—in the coming weeks or months,” Citi Research analysts said in a note dated October 27.
Uncertainty around AGR relief has been a major obstacle for VI in completing its planned Rs 25,000- crore bank funding.
“We reckon the AGR relief from the government could give banks the confidence to extend credit to the company. This, in turn, would ease concerns over the company's network capex sustainability, which have surfaced amid delays in securing bank debt,” Citi analysts said.
With VI’s share price hovering near the critical Rs 10 mark, analysts added that AGR relief could also pave the way for another equity raise.
“A successful equity raise would dilute the government’s stake below the current 49 percent, providing the government with the option to convert additional dues into equity. The AGR relief could, therefore, in our view, trigger a series of positive events for VI, which could also give Indus management the confidence to reinstate dividends,” Citi noted.
Analysts at Emkay Global said that VI’s leverage remains elevated even without AGR dues, and the government will also need to address the company’s high spectrum debt.
“As this decision specifically pertains to VI, considering its unique situation, we see a low likelihood of the government reversing Bharti Airtel’s outstanding AGR dues of Rs 37,100 crore,” Emkay said in a separate note dated October 27.
Emkay added that the SC’s October 27 decision marks a step towards creating a more competitive telecom market in India, but details are awaited on the government’s broader plan to resolve VI’s spectrum-related liabilities.
“With this, the government now has enough room to plan for VI’s long-term sustainability. Any policy change related to spectrum costs could potentially benefit other telecom operators as well, though more clarity is needed. Notably, VI's valuation at 13.8x FY27E EV/EBITDA appears expensive,” Emkay said.
What did the Supreme Court say?
A bench comprising Chief Justice BR Gavai and Justice K Vinod Chandran, on October 27, said that any decision on granting relief to Vodafone Idea falls within the government’s policy domain. The observation came while hearing VI's petition filed last month, which challenged the Department of Telecommunications’ (DoT) demand for an additional Rs 9,450 crore in AGR dues. The country’s third-largest telecom operator has also sought a waiver of interest and penalties, arguing that several components of the dues remain disputed and unfinalised.
“Taking into consideration the change in circumstances, and that the government itself now holds a substantial equity stake in the petitioner company, and further since the issue involved is likely to have a direct bearing on the interests of 20 crore consumers, this is a matter within the policy domain of the Union,” the Supreme Court said in its order.
Vodafone Idea currently owes around Rs 83,400 crore in AGR dues, with annual payments of Rs 18,000 crore until 2031. Including penalties and interest, its total liabilities to the government are estimated at nearly Rs 2 lakh crore.
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