Vodafone Idea’s stock witnessed a strong rally, climbing more than 11 percent in intra-day trade, after reports emerged that the government is considering fresh relief measures on adjusted gross revenue dues. The development comes as a lifeline for the financially strained telecom operator, which has been grappling with massive debt for years.
According to sources, the Department of Telecommunications has reached out to the Prime Minister’s Office with informal proposals to ease the cash flow situation of Vodafone Idea and Bharti Airtel, the two companies most affected by the AGR ruling. The PMO has reportedly asked the DoT to prepare a detailed formal plan suggesting possible solutions. Options under consideration include a waiver of some part of the dues, an extension of the moratorium, or even a combination of both measures.
AGR Dues and Their Impact
The issue of adjusted gross revenue has weighed heavily on telecom operators ever since the Supreme Court in 2019 upheld the broad definition of AGR as interpreted by the DoT. This interpretation meant that both Bharti Airtel and Vodafone Idea had to pay much larger dues than expected.
Vodafone Idea’s AGR debt stands at around ₹83,400 crore, while Airtel owes nearly ₹43,980 crore. Vodafone Idea alone had sought a waiver of ₹45,457 crore, while Airtel had appealed for relief of approximately ₹34,745 crore.
Although the government had introduced a telecom relief package in 2021, which provided a four-year moratorium on AGR and spectrum dues, the financial stress has continued. The package also allowed telcos to convert part of their dues, including interest on deferred payments, into government equity. Vodafone Idea opted for both options, leading to the government now holding a 49 percent stake in the company after converting over ₹53,000 crore into equity in two separate tranches.
Funding Challenges and Future Plans
Despite raising ₹18,000 crore last year through a follow-on public offer and additional promoter support, Vodafone Idea continues to struggle with liquidity. Its ambitious capex plan of ₹50,000 crore to ₹55,000 crore between FY25 and FY27 requires steady cash flow. For FY25, the company spent around ₹9,570 crore on network expansion and 5G rollout, just short of its guidance of ₹10,000 crore.
In the first quarter of FY26, Vodafone Idea deployed ₹2,440 crore out of its half-yearly target of ₹6,000 crore. However, with funding avenues tightening and banks waiting for clarity on AGR relief before extending further credit, the telco is now turning to non-banking sources for additional funds.
Why Relief is Critical
Vodafone Idea has warned in its petition to the Supreme Court that without relief it may not be able to continue operations beyond FY26. Although the court dismissed the petition earlier this year, it left the matter open for the government to address. Investors and industry analysts believe that a resolution is vital not only for Vodafone Idea’s survival but also for the health of the entire telecom sector, where competition ensures affordable tariffs for consumers.
Shares of Bharti Airtel also edged higher, although modestly, reflecting the wider impact of possible AGR relief on the industry.
The Road Ahead
As the government weighs its options, all eyes are on the final relief package that may be announced. Any clarity on the AGR front will not only lift investor sentiment but also give Vodafone Idea a fighting chance to raise capital and sustain its network expansion. For now, the stock rally reflects the market’s cautious optimism that the government may step in with a pragmatic solution.
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