After firmly rejecting any further debt-to-equity conversion of Vodafone Idea’s adjusted gross revenue (AGR) dues, the Indian government is now considering alternative forms of support to keep the financially distressed telecom operator afloat — aiming to prevent a duopoly in the telecom sector.
Communications Minister Jyotiraditya Scindia recently reaffirmed the government’s stance, stating there is no scope for additional equity conversion, having already raised its stake in Vodafone Idea to 49% following a previous conversion of ₹36,500 crore in spectrum dues. “We have taken the equity route to a significant extent. That avenue is now closed,” Scindia said.
With equity conversion ruled out, the government is assessing other options to ensure Vodafone Idea’s survival and maintain sectoral competition. One potential measure under consideration is the deferment of the telco’s dues beyond September 2025, when the current moratorium on AGR and spectrum payments ends.
However, officials acknowledge that granting selective relief to one operator may raise concerns of fairness. As a result, any potential extension of the moratorium could be rolled out industry-wide, benefiting all telecom players. “The government is evaluating options with consumer interest in mind,” a senior official noted.
Analysts Back Deferral as Most Viable Support Tool
According to industry analysts, a two-year deferment of Vodafone Idea’s dues appears to be the most likely form of assistance. They argue that a two-player market dominated by Reliance Jio and Bharti Airtel could hurt competition and consumer choice, especially since Vodafone Idea owes the largest amount to the government.
As of March 31, 2025, Vodafone Idea’s total outstanding dues stood at ₹1.94 lakh crore, which includes deferred spectrum payments due until FY44 and AGR liabilities (including accrued interest) payable until FY31.
Last month, the Supreme Court rejected Vodafone Idea’s plea for relief from ₹45,457 crore in AGR dues, citing interest, penalties, and interest on penalties. However, the court also noted that it would not oppose any supportive measures the government may choose to take.
Government Walking a Tightrope
Sources indicate that inter-ministerial discussions are ongoing to strike a balance between protecting government revenues and providing Vodafone Idea with sufficient operational relief. Officials admit that in the event of a collapse, a significant portion of the telco’s dues may become irrecoverable. Despite the financial challenges, the government intends to remain a passive public investor and could, over time, explore divesting part of its stake to sovereign wealth funds or strategic buyers.
Vodafone Idea’s financial situation remains precarious. The company reported a net loss of ₹7,166 crore in Q4 FY25, widening from ₹6,609 crore in the previous quarter. Its subscriber base declined to 198.2 million by March 2025, down from 199.8 million three months earlier.
