During Tuesday’s trading session, shares of one of the leading telecom service providers in India surged nearly 7 percent on BSE. The rally came after reports surfaced that the government is considering offering relief to the company on its Rs. 84,000 crore dues.
With a market cap of Rs. 74,757 crores, at 11:47 a.m., the shares of Vodafone Idea Limited were trading in the green at Rs. 6.9 on BSE, up by around 5.3 percent, as compared to its previous closing price of Rs. 6.55. The stock has delivered negative returns of more than 59 percent in one year, and has fallen by nearly 0.3 percent in the last one month.
What’s the News
The government is exploring various options to offer Vodafone Idea Limited additional relief on its massive regulatory dues amounting to Rs. 84,000 crore amid growing concerns that the telecom company could struggle to stay afloat without some flexibility, according to a report by The Economic Times.
As of March 2025, Vodafone Idea’s outstanding adjusted gross revenue (AGR) dues stand at Rs. 83,400 crores. The company is scheduled to begin annual instalment payments from March 2026, continuing through to the end of FY31.
However, in the immediate term, the company is required to pay Rs. 18,064 crore by March 2026. With a cash and bank balance of only Rs. 9,930 crore at the end of March 2025, there is a real concern within the government that, without some form of relief, Vodafone Idea may not be able to sustain operations.
So, what are the options the government might consider? One proposal under discussion is to extend the repayment timeline from the current 6 years to 20 years. Along with this, there’s a suggestion to switch from compound interest (which includes interest on interest) to a simpler interest model. If implemented, this could significantly reduce the company’s annual repayment burden. However, even with more lenient terms, there are concerns about whether Vodafone Idea’s current cash flows are strong enough to meet even the reduced dues.
Another option being weighed is allowing the company to make a token annual payment, potentially in the range of Rs. 1,000-1,500 crore, until a final resolution on the AGR issue is reached. This would ease short-term pressure while giving the government time to assess a long-term strategy.
According to sources, the government’s primary aim is to prevent the collapse of Vodafone Idea. A shutdown would have serious implications, especially for the Centre itself, which is the largest shareholder with a 49 percent stake in the company. Additionally, a large chunk of the outstanding dues is owed to the government, meaning the government stands to lose the most if the company goes under.
On 30th May, the company’s Board approved a fundraising plan of up to Rs. 20,000 crores. The Capital Raising Committee has been authorised to evaluate and determine the appropriate route for the fundraising and handle all related matters.
Financials & More
Vodafone Idea reported a marginal growth in revenue from operations, experiencing a rise of nearly 4 percent YoY, increasing from Rs. 10,607 crores in Q4 FY24 to Rs. 11,014 crores in Q4 FY25.
During the same period, the company also reported an improvement in its bottom line, with net loss narrowing by around 6.6 percent YoY, from Rs. 7,675 crore to Rs. 7,166 crore.
During the March quarter, Vodafone Idea lost 1.6 million subscribers, bringing the total subscriber loss for the full fiscal year to 14.4 million. The Average Revenue Per User (ARPU) rose slightly to Rs. 164 from Rs. 163 in the previous quarter. However, this remains below competitors like Reliance Jio (Rs. 206) and Bharti Airtel (Rs. 245).
Written by Shivani Singh
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