Telecom operator Vodafone Idea (Vi), which has been struggling with losses, a huge debt burden and declining subscribers, has finally got a major relief. The telco on Friday confirmed that the AGR (adjusted gross revenue) dues for the period of 2006-07 to 2018-19 have been frozen.
Additionally, the Department of Telecom is to set up a committee to reassess the AGR dues. While that is great news for the company, it may not be enough to strengthen the company, say analysts.
Vodafone Idea has massive AGR dues of over Rs 87,000 crore. According to analysts, earlier, the company was supposed to pay Rs 75,900 crore in six equal instalments annually starting March 2026.
Now, as per the revised schedule, the company will have to pay a maximum of Rs 124 crore annually over the next six years, between March 2026 and March 2031.
It will have to pay Rs 100 crore annually over four years from March 2032 to March 2035. The remaining AGR dues have to be paid in equal instalments annually over six years between March 2036 and March 2041.
This is a massive relief for the telco that has been battling a financial crisis for the last few years. Not surprisingly, the stock surged on Friday, hitting a high of Rs 12.51, not too far from its 52-week high of Rs 12.80, before pulling back, amid a broader market weakness.
While the company may have got a huge respite on the AGR dues, that is not the only thing to worry about for the telco. A big challenge for Vi has been that it has been constantly losing subscribers to rivals Reliance Jio and Bharti Airtel. Also, despite the government relief on AGR, its debt remains very high.
According to an analysis by Pranav Kshatriya of Emkay Global Financial Services, Vi’s pre-IndAS116 annualised EBITDA (earnings before interest, taxes, depreciation and amortisation) is around Rs 898 crore, which is 6.7 per cent of its spectrum debt, with a cash balance of Rs 3,080 crore as of the end of the second quarter. The management gave guidance for the capex spends of Rs 7,500-8,000 crore for FY26.
“With this, leverage remains high even without AGR dues, and the government will need to consider a plan for reducing spectrum debt. We believe that further capital infusion and restructuring of the spectrum liabilities are crucial for long-term sustainability of the company,” said Kshatriya.
Separately, Airtel and Jio continue to gain market share, supported by higher customer stickiness, improving financial performance and favourable market conditions, according to Kuber Chauhan of Axis Securities, who believes the momentum is likely to continue, driven by the 5G rollout, tariff hikes, strategic alliances and robust cashflows.
“While competitive intensity has moderated due to market consolidation, challenges such as high debt levels for weaker players and regulatory obligations persist,” said Chauhan.
Vi raised Rs 18,000 crore through a follow-on public offer in April 2024. Apart from that, it is also getting Rs 5,836 crore from promoters. The company has, for some time, also been in discussions with lenders to raise around Rs 25,000 crore in debt. However, those plans haven’t fructified so far, with banks particularly keen on getting clarity on spectrum and AGR liabilities to the government.
Last year, the government converted Vi’s Rs 36,950 crore in spectrum dues to equity. With the AGR relief coming in now, doors will possibly open for the company to complete its debt fundraising, which will help it continue with its planned network capex and coverage expansion plans, say analysts.
According to Ambit Capital analysts, the moratorium on AGR payments will enable Vi to raise debt and equity funding. “But servicing debt payments and providing a return to equity investors is predicated on subsequent tariff hikes,” they said recently.
As of September 2025, Vi promoters, including various companies of the Aditya Birla Group and Vodafone, held around 25.57 per cent stake in the company, while the government holds 49 per cent.
Since its equity fund raise in 2025, Vi has increased 4G population coverage and data capacity, commenced network expansion, installing over 17,000 towers and launched 5G services in 17 circles. The benefits of this network enhancement have started to reflect in reducing subscriber losses, say analysts. But it hasn’t been able to completely arrest the slide.
According to Motilal Oswal Financial Services, Vi is still expected to see a 1.5 million decline in subscriber base quarter-on-quarter in October-December. Revenue is expected to remain flat quarter-on-quarter as the subscriber base decline continues to offset a marginal increase in average revenue per user.
Analysts expect telecom companies to hike tariffs sometime this year, given the consolidated market structure and the fact that India now has among the highest data usage, but among the lowest data prices. The last time tariffs were hiked was in July 2024.
