CareEdge Ratings changes outlook for Vodafone Idea to positive from stable

AGR dues relief, improved operating performance and a large upcoming capex plan prompt the ratings agency to revise its outlook on the telecom operator

CareEdge Ratings upgraded the outlook for Vodafone Idea from stable to positive following the relief the No. 3 carrier has got on adjusted gross revenue (AGR), coupled with strong operational performance and an upcoming capex plan, the ratings agency said on Friday.

 

“The ‘Positive’ outlook reflects expectation of likely improvement in VIL’s operating performance, supported by AGR relief, which is expected to facilitate timely funding tie-up and acceleration of network capex,” the agency said.

 

The debt-laden telecom services provider announced a ₹45,000-crore capex plan for the next three years earlier this week with steep cash generation targets, just weeks after the Department of Telecommunications froze the company’s AGR dues at ₹78,695 crore, which would be reassessed. While it needs to pay ₹1,144 crore over the next 10 years towards AGR, the balance of the reassessed dues would be payable in six annual instalments.

 

This strengthens VIL’s long-term debt tie-up prospects in accelerating network capex investments, thus enabling improvement in its operating performance, the agency said, but added that successful tie-up of long-term debt and execution of planned capex will be essential in achieving sustainable operating improvements. The telco is in discussions with banks for raising ₹25,000 crore and will raise another ₹10,000 crore from non-funded bank sources.

 

CareEdge said the company’s liquidity, supported by unutilised follow-on public offer proceeds of ₹1,488 crore and non-convertible debenture issuances of ₹3,300 crore, remained adequate to meet near-term obligations, including bank borrowings of ₹1,125 crore outstanding as of December 2025.

 

“However, liquidity over the medium term remains contingent upon timely tie-up of the envisaged bank debt to fund accelerated network capex and manage elevated spectrum-related payment obligations from FY28 onwards. Timely financial closure and steady operating cash flows will be essential for maintaining adequate liquidity in the medium term,” the agency said. Government-related dues continue to remain elevated at ₹1.94 trillion, leading to high leverage and elevating the carrier’s risk profile.

 

CareEdge cautioned that the outlook may be revised to ‘Stable’ upon sustained delay in improvement in subscriber trends, average revenue per user and cash flow generation, and delay in project implementation.