Centre mulls relief for Vodafone Idea as threat of insolvency looms

The Centre is considering further relief for telecom giant Vodafone Idea (Vi) on its regulatory outstanding dues of ₹84,000 crore amid concerns that it might go bankrupt without executive support, The Economic Times reported on Tuesday.

The government is considering extending the repayment period for adjusted gross revenue (AGR) dues from the current six years to 20 years, while also shifting from compound to simple interest on the outstanding amount, the report claimed.

Another proposal reportedly under discussion is to have Vi pay a nominal amount—around ₹1,000–1,500 crore annually—towards the dues until a broader resolution on AGR liabilities is reached.

In addition to the two main proposals, officials are also evaluating other solutions, with the possibility of offering relief through a single measure or a combination of approaches.

According to the report, the government is trying to keep the company afloat because it holds 49 per cent stake in the telecom major.

Not good enough to have a duopoly, says Union minister

Union Telecom Minister Jyotiraditya Scindia said the need for a competitive telecom sector, stating that the country cannot afford to rely on just one or two operators.

“It’s not good enough having a duopoly or one carrier or two carriers,” Scindia said at an event in Delhi. He added, “India must have competition in every sector. India today is probably the only country in the world for competition in ISP domain," he said, as quoted by Moneycontrol.

In an interview to Business Standard earlier this month, he said, "My job is to provide multiple players, whether it's in satellite, or broadband, or internet service providers or telcos."

However, he did not discuss what further relief the Centre is considering for Vi. After Tuesday's report of government considering relief, shares of Vodafone Idea were trading up by over 5.9 per cent at ₹6.92 apiece at the BSE on Tuesday.

Vi warns of insolvency by FY26

Last month, Vi reportedly told the Centre it will not be able to operate beyond FY26 without government's support. It added that given its mounting expenses and lack of support from banks, it might just have to file for insolvency with the National Company Law Tribunal (NCLT).

The beleaguered telco claimed that it hasn't received any support from the banks despite a ₹26,000 crore equity infusion and ₹36,950 crore equity conversion from the Union government. The plea to the government came after dismissal from the Supreme Court to waive off its AGR dues.

Looming dues

Cash-strapped Vi had reported total deferred payment obligations of ₹2.02 trillion at the end of the third quarter (October–December) of FY25. As part of the telecom reforms package approved by the Cabinet in September 2021, the government had allowed financially stressed telcos to convert a part of their debt owed to the government into equity.

With the four-year payment moratorium ending in September 2025, Vi faces substantial payment obligations. Between then and March 2026, the company has to pay ₹12,000 crore to the government, including both principal and interest. Subsequently, it is required to pay ₹43,000 crore annually for five years, from FY27 to FY31.