Vodafone Idea's chance to dial stability may reshape India's telecom market

Debt-laden Vodafone Idea has been given a chance to turn itself around. This is also crucial for the government, which wants to avoid a duopoly in the telecom sector

Vodafone Idea Ltd (Vi) informed the exchanges on January 9 that the government had granted it a 10-year moratorium on its adjusted gross revenue (AGR), dues which would be frozen as of December 2025 at ₹87,700 crore. 

 

A committee of the department of telecommunications (DoT) would in the meantime reassess the dues and its decision on this would be final. The dues are to be paid in six equal instalments between March 2036 and March 2041. In the interim, Vi has to pay a total of ₹100-120 crore in the next 10 years up to March 2035.

 

The move clearly provides relief to Vi: Analysts estimate that based on net present value it will fork out 65 per cent less on AGR, freeing up capital and enabling it to raise fresh funds for its network expansion (its aim was to hit ₹45,000 crore). 

 

Vi shares went up on Friday initially by 8 per cent but closed the day in the red by 1.74 per cent, ending at ₹11.30 a share. Many say the relief has fallen short of expectations — they expected DoT to reassess and reduce the AGR dues by at least 50 per cent upfront — and that this would create uncertainty among banks and potential investors to put money into the telco. And there is also the risk of the moratorium being challenged by competing telcos.     

 

Welcome relief

 

Vodafone is far behind its rivals in 5G and could just lose the game, analysts said, pointing to its consistent loss of subscribers and the lowest average revenue per user (Arpu) among private telecom companies.

 

Brokerage firms took a cautious approach. IIFL said that while the AGR issue was more or less settled, it was only the first step. That’s because for Vi this accounts for only 40 per cent of the total government dues — the rest of the ₹1.2 trillion it owes the government is made up of spectrum payment dues. Besides, Vi has to pay a sizeable amount each year — around ₹6,000 crore next year, followed by ₹15,000 crore in 2027-2028 (FY28), and ₹25,000 to 26,000 crore each year from FY29 onwards.

 

Of course the government too is walking a tightrope. Years ago it was decided that telecom, being a strategic sector, cannot be saddled with a “duopoly”. In order to ensure tariffs for the masses remained low, there was a need for at least three private operators and one state-owned telco (BSNL/ MTNL).

 

Unlike in aviation, which is a strategic sector with a duopoly, it has followed a different strategy in telecom. The government has in various tranches converted Vi's deferred interest on AGR and spectrum dues of over ₹36,950 crore into equity. As a result, it has a 49 per cent stake now, which makes it the single-largest shareholder in the company. 

 

The government has also rustled up ₹3.2 trillion for the revival and restructuring of BSNL/MTNL since 2019, which comes to ₹32,000 per subscriber (assuming there are 100 million subscribers). 

 

Despite all this, BSNL’s market share in November 2025 was 7.94 per cent – lower than in November 2024 (8.19 per cent) and November 2023 (8.15 per cent). This, despite the fact that it has launched 4G across most of the country and  now promises an upgrade to 5G soon.

 

This means that Vi, with a 17 per cent market share in November last year, is key to ensuring that there is no duopoly in telecom. 

 

For Vi, the big challenge has clearly been to raise the funds needed to roll out pan-Indian 5G services and expand its network. It entered the 5G fray only in March 2025 — nearly two and a half years after its key rivals Jio and Airtel, which by then had grabbed a substantial portion of the country’s telecom subscribers for their 5G networks in what was a two-way race.

 

The shift to 5G, thanks to the aggression of Jio and Airtel, was faster than what was anticipated. Already, one-third of the total  in the country has shifted to 5g with Jio or Airtel. Vi is now rolling out 5G in 17 circles across 29-plus cities but has not made subscriber numbers public.

 

It is not that Vi did not try and raise money — but a 5G rollout requires substantial investments. Reliance Jio and Bharti Airtel have collectively invested ₹2.7 trillion, nearly half of which is for spectrum payments. And Jio is already preparing for the next phase — 5G Advanced services.

 

To be fair, Vi raised ₹18,000 crore through a follow-on public offer in April 2024 and attracted bids of ₹90,000 crore from investors —  showing that there was enough value in the company to turn around. Indeed, one of its promoters, Aditya Birla Group Chairman Kumaramanglam Birla, said this was a turning point for the company. 

 

Many analysts expect the latest relief will help Vi fast-track its ₹25,000 crore bank debt-raise and follow it with another equity raise. There are reports that Tillman Global Holdings will invest $4-6 billion, but there has been no official confirmation.

 

One problem for Vi has been a consistent fall in its subscriber base  — at peak in November 2018 with 421 million customers, it dropped to 243 million in 2022 and 199.7 million in 2025. Its Arpu, which is dependent on 2G and 4G customers, is the lowest among the three.  

 

Does this mean that the government, despite ensuring that there is no duopoly, has failed to deliver the goods? No doubt there has been a consolidation in market share — Airtel and Jio together 

 

controlled over 75 per cent of the mobile market in November 2025, up from 72 per cent two years ago in the same month. 

 

Yet, despite a substantial market share with the top two, tariffs have been stable: The last tariff hike was in July last year and a 12-14 per cent hike planned by telcos has been deferred or delayed. Telcos say the Trai Act, which caps the market share of a telco in each circle to 50 per cent (there is no such provision in aviation) and the presence of a state-owned telco has helped keep any sharp price increase or manipulation under check. 

 

Vi has managed to slow down the pace at which it was losing customers. It lost 9.3 million customers in November 2025 over the previous year  — far less than the 15.5 million customers it lost in 2024 over 2023. 

 

Will Vi be able to get back in the game? That will depend on whether the telco can now raise funds after the substantial relief on its AGR dues. And whether the government will give sops — like offering a substantial waiver on AGR dues upfront, and converting part of its spectrum into more equity. The ball is clearly with Vi and the government.