Vodafone Idea Limited (VIL), India’s third-largest telecom operator, is relying on government intervention to navigate its financial challenges as its statutory dues increase in the coming financial year. With the moratorium on payments ending in FY26, Vi’s payout towards adjusted gross revenue (AGR) dues will rise significantly, straining its cash flow and potentially hindering its network expansion efforts without government support.
The telco has emphasized that the funds it is currently raising are primarily allocated for capital expenditure, while revenue from services is directed toward meeting liabilities. However, a higher payout obligation could disrupt this financial strategy, making government assistance crucial. Notably, the government, a stakeholder in Vi, has previously extended support during critical periods. “The government is cognizant of the fact that support is required, and I am confident they will find a solution, especially since Vi has already raised Rs 26,000 crore of equity and started its network investment cycle,” said Akshaya Moondra, CEO of Vodafone Idea Limited.
Recently, the government waived the requirement for telcos to submit bank guarantees (BGs), providing Vi with much-needed relief, as the company had expressed its inability to furnish them. This move has enhanced Vi’s ability to secure additional funding. However, as per a MoneyControl report, Vi will still need to provide a BG worth Rs 6,090 crore to cover the shortfall from the 2015 spectrum auction. Meanwhile, lenders are closely watching the government’s stance on the AGR issue, as its decision will be crucial in determining Vi’s ability to attract further financial backing.
