Vodafone Idea warns of insolvency risk beyond FY26 without govt support

Telecom major Vodafone Idea has told the government that the company will not be able to operate beyond FY26 without its 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), CNBC-TV18 reported on Friday.

 

The beleaguered telco - which still enjoys a 'too big to fail' status in the country, with an active subsriber base of over 175 million as of March this year - has 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.

 

 

It further stated that without the government's support, the banks will not fund, and the company will not be able to operate. It cautioned that failing backup from the state, the value of the government's equity stake in the company could fall to zero. 

 

A fresh plea in Supreme Court

 

The report comes a day after Vi filed a fresh plea before the Supreme Court seeking a waiver of over ₹30,000 crore of Adjusted Gross Revenue (AGR) dues, specifically relating to the penalty and interest on the penalty component of the AGR levy.

 

The court is expected to take up the matter on May 19.

 

Vi's counsel submitted that the survival of Vodafone Idea is crucial for maintaining competition in the telecom sector, and that the company is unable to bear the financial burden on its own, sources said. The four major players in the industry are Reliance Jio, Bharti Airtel, Vi, and to a lesser degree, BSNL.

 

The plea comes after the government had in March approved the conversion of the telco’s outstanding spectrum auction dues into equity shares worth ₹36,950 crore. Queries seeking an official response from Vi did not elicit a response. 

 

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.