Vodafone Idea in talks with government on AGR relief after Supreme Court setback

Moondra also reiterated the need for a tariff hike to improve returns on capital and support future industry investments.

Vodafone Idea has initiated fresh discussions with the government to seek a resolution on its adjusted gross revenue (AGR) dues, just two weeks after the Supreme Court rejected its plea for a waiver on related payments.

“As far as the government relief is concerned, I think we are engaged with the government. Whether what the government will do, I think I cannot comment on behalf of the government. But definitely, post the judgment we continue with our engagement with the government to find a solution to the AGR matter… I see no reason why the government should be constrained in any way to offer relief,” said CEO Akshaya Moondra during a June 2 earnings call with analysts.

Moondra also said the telco is in talks with banks to raise debt funding for its long-term expansion plans, but lenders are seeking greater clarity on the company’s dues before agreeing to lend.

“After the conversion, we have started reengaging with the banks. There are some activities which we have to finish, which are currently in progress… we will get to again a point of discussion with the banks somewhere in this month once some of the prerequisites in terms of those actions and activities are completed,” he said.

He added that banks continue to seek more certainty around AGR liabilities. “Conversion, of course, has been a big step forward… banks would want some clarity on the AGR dues. But while that is happening it is not preventing the discussions to go forward. Discussions are still continuing.”

Vodafone Idea has been attempting to raise Rs 25,000 crore in bank funding for an extended period. The company noted that a recent credit rating upgrade and the government’s conversion of Rs 36,950 crore dues into equity have improved its engagement with lenders.

The telco plans to invest Rs 5,000–6,000 crore in capital expenditures during the first half of FY26 to strengthen its network and infrastructure. However, Moondra said the next phase of spending will depend on bank funding.

The Supreme Court on May 19 dismissed writ petitions filed by Vodafone Idea, Bharti Airtel, and Tata Teleservices, which sought relief on interest, penalties, and interest on penalties associated with AGR dues.

Vodafone Idea owes the government Rs 83,400 crore in AGR dues and had asked for a waiver of over Rs 45,000 crore, which includes interest and penalties. While rejecting the plea, the Supreme Court bench of Justices J.B. Pardiwala and R. Mahadevan clarified that the government could still choose to intervene. “If the government wants to help you, we are not coming in your way,” Justice Pardiwala had said.

India’s third-largest telecom operator, Vodafone Idea, continues to face regulatory liabilities of nearly Rs 2 trillion. In a recent Supreme Court filing, the company warned that it may be unable to continue operations beyond FY25 without bank funding support, which remains uncertain due to unresolved AGR liabilities.
“With Rs 16,500 crore AGR payout looming in March 2026, a combination of AGR relief and fund-raising assumes increasing urgency for Vi,” IIFL Capital said in a June 2 note.

In May 2023, Vodafone Idea announced plans to spend Rs 50,000–55,000 crore over three years to expand its 4G network and roll out 5G services. Moondra said a large portion of the FY26 capex would be implemented in the current quarter.

“A large part of the (FY26) capex will be implemented in the current quarter. In terms of our next round of capex, we have to decide and firm up our plan. It also has some dependence on funding. At least for this quarter and coming quarter, we are on track of incurring a capex of around Rs 6,000 crore,” he said.

“(With) the capex, which is already under execution, we should be reaching a level of 84% of (4G) population coverage. I believe we will move up from 84%, but to get to 90% (the capex) has got linkages with bank funding,” Moondra added. As of March-end, Vodafone Idea had expanded its 4G coverage to 83%, up from 77% a year earlier.

The telco incurred a capex of Rs 4,230 crore in the January–March quarter—its highest since the 2018 merger of Vodafone India and Idea Cellular. For FY25, the company spent Rs 9,570 crore in capex, up sharply from Rs 1,850 crore in FY24.

The executive also confirmed new renegotiated IT outsourcing contracts with IBM and Kyndryl. Moneycontrol on March 25 reported that Vodafone Idea awarded IBM and Kyndryl a multi-year, bifurcated IT outsourcing deal after renegotiating the terms at a combined value between $500 million and $600 million.

“For IT cost, we were continuing with many legacy contracts. We have revisited them, and in the last year, IT costs have also come down, and probably the benefit of some of those IT contracts, which have been renegotiated in the second half of the year, would also spill over and give a higher benefit in the coming year,” Moondra said.

The executive said the telco is intensely focused on managing costs as it continues with network rollout. “...the costs are being maintained and they are not going up as much as they should by rolling out of new sites,” he said.

The telco has negotiated tower rentals, the most significant saving coming from energy cost optimisation. “Then there have been activities and initiatives like we have in-sourced fibre management and also managed services for some of the radio networks…particularly on fibre, it was a major activity whereby we insourced everything,” he added.

In a stock exchange filing dated May 30, Vodafone Idea said its board had approved raising up to Rs 20,000 crore via a follow-on public offering (FPO), private placement, or other permissible methods. The company said a capital raising committee will evaluate the most suitable route.

Moondra also reiterated the need for a tariff hike to improve returns on capital and support future industry investments.“Further tariff increases are essential to ensure a fair return on significant investments and support future capital expenditure in the telecom industry. Additionally, the industry needs to move towards a pricing model where heavy data users contribute more proportionally to the high usage than the current pricing structure ,where the incremental data usage comes at an extremely low, unsustainable price,” he said.