After categorically ruling out any further debt-to-equity conversion of Vodafone Idea’s adjusted gross revenue (AGR) dues, the government is now exploring alternative options to support the financially strapped telecom operator if the need arises. The move is part of the government’s efforts to prevent the creation of a duopoly in the telecom sector.
Communications minister, Jyotiraditya Scindia, has categorically said that there is no further scope for converting Vodafone Idea’s dues into equity. He has said that the government had already raised its stake in the company to 49% following the conversion of spectrum debt worth Rs 36,500 crore. “We have taken the equity conversion route to a significant extent. That avenue is now closed,” Scindia has said.
This leaves the government with limited options to assist the telco, but it is keen to ensure Vodafone Idea’s continued operation to preserve competition in the sector and protect consumer interest. Officials say that one of the options on the table is a further deferment of the telco’s dues post-September 2025, when the current moratorium period for AGR and spectrum payments ends.
The government is mindful that extending such relief to just one operator could raise questions of fairness. Therefore, any potential extension will likely be applicable across the industry. “So, the government is weighing options, keeping the interest of consumers in mind,” a senior official said.
Analysts said that a two-year deferment of Vodafone Idea’s AGR dues is the most plausible form of support. They pointed out that the government may not want to risk a two-player market dominated by Reliance Jio and Bharti Airtel, particularly given that Vodafone Idea owes the highest dues to the government. As of March 31, 2025, Vodafone Idea’s total dues totalled Rs 1.94 lakh crore. This includes deferred spectrum dues payable up to FY44 and AGR-related liabilities (including interest accrued but not due) payable till FY31.
Last month, the Supreme Court dismissed Vodafone Idea’s plea for relief from Rs 45,457 crore in AGR dues, comprising interest, penalties, and interest on penalties, despite arguments about the risk of collapse and its impact on over 200 million users. However, the apex court said that if the government wants to help the company, it would not stand in its way.
Sources indicate that inter-ministerial consultations are underway to find a middle path that safeguards government revenues while providing sufficient breathing space for the company. Officials said that in the event of Vodafone Idea’s collapse, much of the dues may never be recovered.
Despite the financial strain, the government is expected to continue as a passive public investor and may, in the long term, explore selling part of its stake to sovereign wealth funds or other strategic investors.
Vodafone Idea’s financials continue to remain stretched. The company posted a loss of Rs 7,166 crore in the January-March quarter of FY25, compared to Rs 6,609 crore in the previous quarter. Its subscriber base also shrank to 198.2 million as of March 31, 2025, down from 199.8 million three months earlier.
On Friday, Vodafone Idea’s shares closed down 1.77% at Rs 6.67 on the BSE.