Vodafone Idea chief executive officer (CEO) Akshaya Moondra said that the company is confident that the Indian government will resolve the AGR issue, given its position as the largest stakeholder in the entire exercise. He said the telco is regularly engaging with the government on the issue.
"...the government is very cognizant of the fact that support is required at this time. They have also seen that we have raised equity of Rs 26,000 crore overall through promoters, FPO vendors, converting some of their dues in the last 10 months or so. And what we have made the investment we started the investment cycle, we have seen positive results coming out of that. And government is actually the largest stakeholder in this entire exercise, so they are cognizant of this fact and confident that they will find a solution," Moondra told analysts during the Q3 earnings call on February 12.
He said that the bank gurantee relief is a clear indctaion from the govenment that it remains committed to support the telecom sector through reforms as and when required.
Vodafone Idea, he said, has restarted discussions with banks for debt-funding but banks are also looking at some clarity on the AGR front and final position of the government.
"These are progressing, and we believe that we should be able to kind of come to a conclusion soon. I will not be able to give you a timeline, at this point of time, because there are multiple moving parts," Moondra said.
The company is also regularly engaging with the government on equity conversion for both deferred and non-deferred installments.
"...conversion is a part of the reforms package and that should not be a difficulty in the initial period when we are kind of making the investment and improving our cash generation through improvement in performance...when we are talking about conversion generally, it is not necessary that it is only the deferred installments which can be converted. The non deferred installments are also part of that. It is difficult to kind of say what will finally happen, but I would say that the government is very cognizant of the fact that support is required at this time," Moondra added.
Notably, the government is said to working on relief measures for the telecom sector and is now evaluating a proposal to waive a substantial portion of adjusted gross revenue (AGR) dues imposed on companies like Vodafone Idea and Bharti Airtel after the Supreme Court's 2019 verdict.
This move could mark a turning point for India’s telecom sector, providing much-needed financial relief to struggling players.
The proposal, as per media reports, includes waiving 50% of interest and 100% of penalties and interest on penalties. If finalised, it could result in over Rs 1 lakh crore in financial relief for telecom operators, with over half benefiting Vodafone Idea (Vi), which is grappling with severe financial distress.
Vodafone Idea said that 5G site rollout is already progressing in Bombay and Delhi along with other cities. It plans to first launch 5G in Mumbai next month, following by commercial launches in Delhi, Bangalore, Chandigarh and Patna in April.
"...you need to get to some kind of a threshold before kind of doing a commercial launch. That is what we are waiting for. So this is already progressing. The launch has started. In terms of the other circles and the priority would generally follow the priority circles. We said that Delhi, Bombay and Bangalore were the three metros which had to be covered first," he said.
"...of course then we move on to the more other important cities and where we have a strong position like Gujarat, Maharashtra, Kerala."
Following $3.6 billion deals last year with global network vendors Nokia, Ericsson, and Samsung, Vi has been expanding 4G coverage and rolling out 5G. Gear supplies are underway, with rapid deployment of 5G base stations. Vi plans to target 2.15-2.2 lakh 4G towers and aims to add 13,000 new towers by mid-1Q26.
Vodafone Idea CEO Akshaya Moondra advocated for another round of industry-wide price hikes, ideally within nine months of the last hike in July 2024, which would mean by April 2025. He emphasized that “a faster tariff change is a possibility and the need of the hour,” as no telecom operator is currently recovering its cost of capital.
"In a normal scenario, I would have said that a time gap of one year is ideal between two tariff increases. However, I would add to that, that given the place where the telecom industry in India is today...where the return on capital is...whether you take the market leader or you take anyone else...nobody is returning their cost of capital. And in that scenario, I would say it is fairly justified...if it can be faster, it could be nine months also I would say," Moondra said in an analyst call.
He added: "I would say in a normal situation, a 12-month period is ideal to make any changes on tariffs. But given where the industry is today, the faster tariff change is probably a possibility, and the need of the hour."
Moondra remains cautiously optimistic, particularly after Vi’s combined VLR (active) subscriber numbers for December 2024 and January 2025 showed positive net additions in 11 circles. He expects this trend to improve further as capex spending accelerates. “After the initial investments that have resulted in higher coverage, we are witnessing green shoots, and the progressive launch of 5G should further improve subscriber traction,” he stated.
Moondra also shared that many prepaid users who had initially switched to state-run Bharat Sanchar Nigam (BSNL) after the July 2024 price hikes are now returning to Vi. "The net port-ins from BSNL have increased between June 2024 and January 2025, which suggests the customer reversals have started," he noted.
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