Vodafone Idea will need its average revenue per user to nearly double by FY28 to around `340 from current levels to service looming spectrum payments that begin this year, analysts said, highlighting that the telco’s financial stress has only partially eased despite recent regulatory relief.
Under the revised AGR framework, Vodafone Idea’s legacy dues have been frozen at around `87,695 crore, with no further interest accrual. Annual payments are capped at a token level until FY35, pushing the bulk of repayments to FY36 onwards. In net present value terms, brokerages estimate this translates into debt relief of about Rs 53,500 crore, materially improving near-term cash flow visibility and reducing headline leverage.
VI’s spectrum burden
However, the AGR relief does little to ease the company’s spectrum burden, which analysts describe as the more immediate constraint. Vodafone Idea is still expected to pay spectrum dues of around 2,500 crore in FY26, rising to 7,000 crore in FY27 and Rs 15,000 crore in FY28, before annual payments climb to roughly Rs 27,000 crore between FY29 and FY32. These outflows arrive well before the deferred AGR instalments, leaving operating performance as the key determinant of solvency over the next four to five years.
As a result, brokerages argue that ARPU growth has now become a critical variable. Vodafone Idea’s customer ARPU currently stands at about 180 and blended Arpu stands at167 as on September 30, 2025. Estimates suggest it needs to nearly double to around Rs 340 by FY29 to fund spectrum repayments, routine capex, and operating costs without recurring external support. Even with modest subscriber stabilisation assumptions, internal accruals fall short unless tariffs rise meaningfully and sustainably.
While brokerages anticipated a tariff hike in the first half of the calendar year after Reliance Industries announced plans to list Jio Platforms, the holding company of Reliance Jio, consensus has now moved to the next round of hikes in the mid-to-later part of the year.
JM financial on the impact of AGR relief
“The AGR relief provides breathing room but does not solve the core earnings gap created by spectrum liabilities,” analysts from JM Financial said. “ARPU expansion is now essential rather than optional if Vodafone Idea is to meet medium-term cash outflows from internal resources.”
The relief is nevertheless expected to support the company’s long-pending fundraise, which management has consistently linked to regulatory clarity on AGR. Analysts expect a combination of debt and possible equity infusion to enable Vodafone Idea to step up network investments and narrow coverage gaps, though most remain sceptical about any meaningful market share recovery given the competitive intensity of the sector.
Banks have also shown inclination to further talks on lending to the telco after clarity on the AGR payment dues came in late last week.