CHENNAI: Struggling telecom operator Vodafone Idea Ltd (Vi) has approached the Supreme Court, seeking a waiver or relief on its massive Adjusted Gross Revenue (AGR) dues, warning that it may not be able to continue operations beyond FY 2025–26 without immediate financial support.
AGR is a key metric in Indian telecom industry that determines the amount of revenue telecom operators must share with the government.
In a petition filed on May 13, Vodafone Idea stated that despite receiving a second government lifeline just two months ago, the company is once again facing an existential crisis. Its plea comes amid a sustained refusal by banks to extend fresh credit, citing concerns over Vi’s outstanding liabilities, including the Rs 18,000 crore AGR instalment due in March 2026.
"It is humbly submitted that without bank funding, the Petitioner company (Vodafone Idea) will not be able to operate beyond FY 2025–26, as it does not have the ability to pay AGR instalment of Rs 18,000 crore as per DoT demands," the Vi petition stated.
The AGR dues, a long-standing issue stemming from a Supreme Court ruling in 2019, require telecom companies to pay a percentage of their revenue—including non-core income—to the government. Vodafone Idea, which owes over Rs 58,000 crore in total AGR-related liabilities, has repeatedly sought relief, citing the inability to raise funds or attract strategic investors without regulatory and financial clarity.
Government Support
In February 2023, the Government of India converted a portion of Vodafone Idea’s (Vi) statutory dues into equity, making it the single largest shareholder in the telecom operator. This move was part of a broader telecom relief package approved in September 2021, aimed at giving cash-strapped telecom companies breathing room through deferred payments, interest moratoriums, and the option to convert interest on dues into equity.
Through this arrangement, the government converted ₹16,133 crore (approx. $2 billion) worth of interest related to deferred AGR (Adjusted Gross Revenue) and spectrum usage charges into equity. Following this conversion, the government acquired a 33.1% stake in Vodafone Idea.
Post conversion, the promoters' shareholding in the telco had come down to about 17 percent and 18 percent for Vodafone Group and Aditya Birla Group respectively. However, the government had clarified that it has no intention to manage the company and has classified its role as a "public shareholder" without any active role.
Despite government efforts—including equity conversion of dues and a partial moratorium—Vi’s financial health has remained precarious. The company reported mounting losses in the last quarter and continues to lose subscriber share to rivals Reliance Jio and Bharti Airtel.
With this latest petition, Vodafone Idea has effectively signaled to the highest court that unless the dues are restructured or waived, it may be forced to shut down, potentially disrupting India’s telecom landscape and affecting millions of users.
Industry Implications
A shutdown or major disruption in Vodafone Idea’s operations could lead to reduced market competition, job losses, and a deeper banking sector impact due to exposure from lenders. Analysts say the Supreme Court's decision on this plea could be critical not only for Vodafone Idea’s survival but also for the overall stability of the Indian telecom sector.