Vi's Rs 25,000 cr debt-funding delay may threaten financial turnaround

Vodafone Idea owes Rs 70,320 crore in AGR-related dues, a liability that it is struggling to meet, especially after the Supreme Court's dismissal of its petition

Vodafone Idea’s (Vi) ongoing financial struggles have been compounded by a significant delay in its Rs 25,000 crore debt-funding plan, raising concerns about the telco's ability to achieve a financial turnaround, according to a report by The Economic Times. 

 

The delay follows a setback over the company’s adjusted gross revenue (AGR) dues after the Supreme Court rejected its curative petition to re-compute the figure.

 

As stated in the report, analysts expect the government to intervene and convert part of Vi’s outstanding dues into equity, providing some relief to the cash-strapped carrier.

 

Vi owes Rs 70,320 crore in AGR-related dues, a liability that it is struggling to meet, especially after the Supreme Court’s dismissal of its petition in September.

 

The company is also facing an impending financial burden, with Rs 29,000 crore in government liabilities due by March 2026 and an additional Rs 43,000 crore by March 2027, following the end of the moratorium on its dues in September 2025.

 

Vodafone Idea had initially hoped to secure the necessary funding by late November. However, in light of the AGR petition’s dismissal, the debt-raising efforts are now likely to be delayed. This comes as the company grapples with mounting liabilities and a tough competitive landscape, particularly against rivals Reliance Jio and Bharti Airtel.

 

The government, which holds a 23.15 per cent stake in the company, remains a key player in Vi’s financial recovery. The Aditya Birla Group (14.76 per cent) and Vodafone Group (22.56 per cent) are also co-owners of Vi.

 

The debt funding is crucial for the company to execute its Rs 50,000-Rs 55,000 crore capital expenditure (capex) plan over the next three years. This plan aims to expand Vi’s 4G coverage and accelerate the rollout of 5G services in priority markets, which is vital for the telco to remain competitive. However, the delay in securing these funds raises concerns about the feasibility of the plan.

 

Vi’s CEO Akshaya Moondra, has stated that banks are now seeking clarity from the government on possible relief for the company’s substantial AGR dues, as well as a potential waiver of bank guarantees (BGs), before they can proceed with lending, the report said.

 

Vi has also indicated that it intends to bridge any potential cash shortfall through further debt-to-equity conversions with the government. Additionally, the company has been actively lobbying for the removal of the bank guarantee requirement for spectrum it acquired before 2022. This would ease the pressure of securing Rs 24,746 crore in BGs in the coming months.