Debt Funding: Vodafone Idea CEO Indicates Lenders in “Wait-and-Watch” Mode, Awaiting AGR Clarity

Vodafone Idea CEO Akshaya Moondra recently stated that lenders are currently adopting a “wait-and-watch” approach regarding the company’s debt funding plans, awaiting government clarity on the ongoing AGR (Adjusted Gross Revenue) issue. During an earnings call on November 14, Moondra expressed confidence that once the government provides the necessary clarity on AGR dues, the company would be in a position to secure the required debt funding.

Moondra explained, “Lenders, like other stakeholders, are closely monitoring the AGR situation. However, this issue was not part of the business plan we submitted for debt funding. My promoters and I are engaging with the banks and expect to finalize the deal once clarity emerges regarding AGR.”

Vodafone Idea is seeking government support after the Supreme Court’s decision, which rejected petitions to recalculate AGR dues. The ruling posed a major challenge to the company, which is financially strained and owes significant amounts to the government.

Despite this setback, Moondra reiterated that the government remains committed to maintaining three private telecom operators in the market and recognizes the importance of the curative petition filed by telecom operators, even though no relief was granted by the court.

In September, the Supreme Court dismissed 19 petitions from telecom operators, including Vodafone Idea and Bharti Airtel, seeking recalculation of AGR dues. This ruling was a blow to Vodafone Idea, which requires urgent funding.

As part of its recovery plan, Vodafone Idea raised Rs 24,000 crore this year, including Rs 18,000 crore through India’s largest follow-on public offering (FPO). The company is also aiming to secure Rs 25,000 crore in fund-based facilities and Rs 10,000 crore in non-fund-based facilities by 2024.

Vodafone Idea has outlined a capital expenditure plan of Rs 50,000–55,000 crore over the next three years, which will be financed through a mix of debt and equity raises.

The company is also in discussions with the government to waive bank guarantees worth Rs 24,746.9 crore, which are required for spectrum payments due between October 2025 and September 2026. Moondra highlighted that this request is not just from Vodafone Idea, but also from other telecom operators, and the entire industry is advocating for this waiver.

Moondra further noted that the bank guarantee requirement is limiting telecom companies’ ability to secure debt funding, as it reduces borrowing capacity. “It’s clear that banks are unlikely to offer such guarantees,” he added.

Vodafone Idea is actively seeking debt funding to support investments that will enhance its performance and cash flow. Moondra clarified that any reduction in AGR liabilities was not part of the business plan submitted to banks, upon which a techno-economic evaluation (TEV) was carried out by an external agency.

The company faces a Rs 27,230.3 crore liability for deferred spectrum installments from October 2025 to March 2026, alongside AGR installments due by March 2026. Vodafone Idea hopes that in the event of a cash shortfall, these dues can be converted into equity.

Q2 Performance: For the September quarter, Vodafone Idea reduced its consolidated net loss to Rs 7,176 crore from Rs 8,737 crore in the previous year. The company’s revenue from operations grew by 2%, reaching Rs 10,932 crore.

Customer ARPU (excluding machine-to-machine connections) improved by 7.8% sequentially to Rs 166, driven by a tariff hike. Mobile ARPU rose to Rs 156 from Rs 142 last year and Rs 146 in the previous quarter.