Debt-ridden telecom player Vodafone Idea (Vi) may be forced to delay its ₹25,000 crore debt-funding plan due to lenders' 'wait and watch' stance over the AGR (Adjusted Gross Revenue) dues payable to the government, following a setback after the Supreme Court rejected the company's curative petition to re-compute the AGR figure. Vi owes ₹70,320 crore in AGR dues to the Department of Telecommunications (DoT).
“Post-dismissal of our curative petition, banks want clarity on what’s happening on the AGR front… we are also waiting for some response from the government on whether there will be some relief or no relief. We remain engaged with the government and believe this needs to be addressed on the basis of fairness as there was significant merit in our curative petition,” Vodafone Idea CEO Akshya Moondra said at the earnings call.
"The impact of recent tariff interventions can be seen in improved ARPUs and revenue for the quarter, though the full impact will be reflected over the next couple of quarters. Further tariff rationalisation is needed for the industry to fully cover its cost of capital," Moondra adds.
With the government liabilities amounting to ₹29,000 crore due by March 2026 and another amounting to ₹43,000 crore by March 2027, Vi is experiencing financial burden once the moratorium on its dues ends in September 2025.
AGR forms the foundation of the revenue-sharing model between the government and telecom operators. A certain amount of licence fee and spectrum usage fee are paid by the operators to the Department of Telecommunications (DoT), this fee is calculated by the DoT as a percentage of the AGR.
The apex court, vide its judgement in October 2019, ordered that non-core revenues must be included in the calculation of AGR, concluding a 14-year dispute between mobile operators and the government over its definition. This verdict dealt a severe blow to the telecom industry, imposing dues and penalties worth thousands of crores. In September this year, the court rejected telecom operators' plea to reassess the calculation of AGR dues.
Vi’s fundraising is vital as it will help the debt-ridden telecom company enhance its 4G network and initiate 5G operations. The company has outlined a capital expenditure (capex) plan of ₹50,000-55,000 crore for the next three years.
The government plays a key role in Vi’s financial recovery with a 23.15% stake in the company. Vi’s co-owners also include the Aditya Birla Group with a 14.76% stake and the Vodafone Group with a 22.56% stake.
The struggling telecom company reported a consolidated loss of ₹7,175.9 crore for the quarter ending September 2024, marking an improvement from the ₹8,746.6 crore loss reported in the same period a year ago. This reduction in loss is primarily attributed to an increase in the average revenue per user (Arpu) following the tariff hike in July.
Vi reported a rise in its consolidated revenue from services amounting to ₹10,918.1 crore in Q2 FY25, up from ₹10,714.6 crore during the same period last year. Consolidated revenue from operations rose from ₹10,716.3 crore in Q2 of last year to ₹10,932.2 in Q2 FY25.
