Telecom Operator Urges Higher Equity Conversion to Manage Debt Burden
Vodafone Idea has approached the Government of India seeking additional financial relief as it struggles to meet its Adjusted Gross Revenue (AGR) and spectrum payment obligations. According to a report by NDTV Profit, the telecom operator has requested a larger portion of its dues to be converted into government equity, a move that could potentially raise the government’s stake in Vodafone Idea from 22.6% to 49%.
The request was formally submitted in a letter to Telecom Secretary Neeraj Mittal on March 11, 2025, as Vodafone Idea looks for urgent intervention to manage its precarious financial situation.
Vodafone Idea’s Financial Challenges: Mounting AGR and Spectrum Dues
The financially stressed telecom operator is seeking relief for ₹36,950 crore in AGR and spectrum dues. Of this, an urgent payment of ₹13,089 crore is due in the coming weeks. The company has reportedly indicated that it lacks the liquidity to meet these obligations without government support.
This request follows the Indian government’s 2021 Telecom Relief Package, which provided a lifeline to struggling telecom companies by offering deferred payment options and equity conversion for dues. However, Vodafone Idea’s current financial strain suggests that the relief measures may not be sufficient to sustain its operations.
Government’s Stance on AGR Waivers and Potential Relief Measures
Recent reports indicate that the government has been reluctant to offer complete AGR waivers to telecom companies. However, if Vodafone Idea’s latest request is granted, it could significantly reduce its outstanding AGR liabilities by nearly 75%, providing an estimated relief of ₹52,000 crore. Additionally, it could help the company reduce approximately 25% of its total debt.
This potential relief could also have a positive impact on Vodafone Idea’s stock, with analysts suggesting that the move could add approximately ₹7 per share to its equity value.
Legal Battle Over AGR Dues: Vodafone Idea’s Supreme Court Challenge
Vodafone Idea had previously attempted to contest the AGR dues calculation by filing a curative petition in the Supreme Court in July 2024. The company argued that non-core revenue should not be included in AGR calculations. However, in September 2024, the Supreme Court dismissed the plea, reinforcing the existing dues structure and dealing a major financial setback to the company.
With limited legal options remaining, Vodafone Idea has now shifted its focus to seeking government-backed financial restructuring, including a higher equity conversion.
Implications of Government’s Increased Stake in Vodafone Idea
If the government approves Vodafone Idea’s proposal, it would significantly increase its ownership stake from 22.6% to 49%. This could have several implications:
Greater Government Control – A higher stake may lead to increased government involvement in Vodafone Idea’s strategic decisions.
Investor Confidence – Additional support could stabilize Vodafone Idea’s stock and potentially attract further investment.
Industry Impact – The relief package may set a precedent for other telecom companies facing financial difficulties.
Will the Government Intervene?
As Vodafone Idea waits for a response from the government, industry analysts remain divided on whether the Indian government will accept the proposal. While government support could help stabilize the telecom sector, concerns remain regarding setting a precedent for other struggling firms.
Vodafone Idea has yet to issue an official statement regarding the reports, and neither NDTV Profit nor Moneycontrol has independently verified the company’s exact financial strategy.
