A recent Supreme Court ruling has sparked hopes of a possible turnaround for the beleaguered Vodafone Idea (Vi). The court has permitted the Government of India to review and provide relief on the entire quantum of Vi’s outstanding adjusted gross revenue (AGR) dues.
Vi’s total AGR liability stood at Rs 785 billion as of September 2025. The AGR dues are payable through FY 2031, with Vi required to pay a Rs 164.28 billion instalment by March 2026. This is a big component of Vi’s net debt of over Rs 2.01 trillion, and the company is highly unlikely to be able to serve this. Its net worth is a black hole of negative Rs 824.6 billion due to accumulated losses.
If the Indian government chooses to do so, it can substantially ease Vi’s debt burden. There are several reasons to consider it. First, given the previous conversion of dues into equity, the government is the largest shareholder in Vi with a 49 per cent stake. Therefore, it stands to gain directly in terms of valuations. (The ruling has already led to a rally in Vi’s stock price.) Second, if Vi goes bankrupt, the telecom services market will turn into a duopoly as Jio and Airtel are already dominant players. A duopoly would be unhealthy for the broader economy.
Third, Vi’s collapse would result in significant chaos and inconvenience for subscribers. The telco’s base of 202 million users would be forced to migrate, overburdening the networks of other operators and causing widespread disruption. Alternatively, the government would have to find some ways to keep Vi’s network and other operational assets operational, which would require complex interventions.
Assuming a bailout, Vi’s debt servicing burden would be significantly reduced. If AGR dues are taken out of the equation, its outstanding bank debt stands at Rs 15.4 billion and deferred spectrum payment obligations at about Rs 1.09 trillion (including interest accrued but not yet due), payable in tranches till FY 2044.
Without AGR, Vi would also find it easier to raise debt to support its capex plans. The company is seeking Rs 500 billion-Rs 550 billion for capex over the next three years. It raised Rs 180 billion in April 2024 through a follow-on public offer priced at Rs 11 per share. It is now planning to raise another Rs 200 billion to fund near-term capex.
Operationally, Vi has shown marginal improvements. It is now bleeding subscribers at a lower rate, and also reported its lowest net loss of Rs 55.24 billion in 19 quarters in Q2 FY 2026. Vi incurred a net loss of Rs 121.32 billion in the first half of FY 2026.
There may be some light at the end of the tunnel for Vi. However, even with a comprehensive bailout and increased capex funding, the road ahead will be challenging. Vi would still be going head-to-head with two entrenched operators with far more financial resources, larger subscriber bases, extensive fibre networks, 5G network roll-outs, complete 4G footprints and satellite plans. Regaining market share against this backdrop will be difficult, but at least Vi would have a fighting chance.
