Vodafone Idea Warns of Possible Insolvency Without Govt Support, Putting ₹1.95 Lakh Crore Stake at Risk

Vodafone Idea has reportedly informed the government that it will not be able to continue operations beyond the current financial year without state support, according to sources cited by CNBC-TV18 on May 16.

The telecom firm warned that if such support is not extended, it may be forced to file for insolvency, potentially reducing the value of the government’s stake in the company to zero.

After the recent equity conversions, Vodafone Idea still owes the government ₹1.95 lakh crore in adjusted gross revenue (AGR) and spectrum dues.

Market Share and Stake Details

Vodafone Idea is one of the three largest private telecom service providers in India, with about 18 percent of the mobility subscriber market.

The government presently owns a 49 percent stake in the company following the conversion of interest dues into equity.

Despite the Centre’s capital infusion and equity conversion, Vodafone Idea has reportedly stated that lenders are not offering financial support.

Potential Impact of Insolvency

Sources said that if the telecom operator moves to the National Company Law Tribunal (NCLT) for insolvency proceedings, it could affect over 20 crore subscribers. The company also employs more than 20,000 people.

Earlier on Thursday, the Supreme Court agreed to hear a new plea filed by Vodafone Idea seeking a waiver of around ₹30,000 crore in AGR dues. The hearing is scheduled for May 19.

Plea for AGR Dues Relief

Vodafone Idea’s petition requests a waiver of approximately ₹30,000 crore, which includes interest, penalty, and interest on the penalty component of the AGR dues.

The plea also seeks a direction to restrain the Centre from demanding interest for the duration over which the dues are paid in instalments.

Previously, the Supreme Court had dismissed review petitions by telecom companies including Vodafone Idea and Bharti Airtel, which sought corrections in the calculation of AGR dues.

Court-Mandated Payment Timeline

In its September 2020 order, the Supreme Court directed telecom operators to pay 10 percent of their total dues, as calculated by the Department of Telecommunications (DoT), by March 31, 2021.

The remaining amount was to be paid in annual instalments starting from April 1, 2021, and concluding by March 31, 2031.

The apex court declared the DoT’s AGR demand final and said no disputes or reassessments would be entertained.

The original judgment on the AGR issue was delivered in October 2019, and DoT later sought staggered payments from telecom companies over 20 years.

Share Price Volatility

Vodafone Idea’s stock closed 1.66 percent higher at ₹7.35 per share on the NSE. However, shares plunged by as much as 11 percent on Monday, May 19, after the Supreme Court dismissed the company’s writ petition seeking urgent relief on its AGR dues.

Indus Towers’ shares also dropped by as much as 3.5 percent in response. The apex court, while dismissing Vodafone Idea’s plea, described it as “shocking” and “misconceived.”

Repeat Appeal for Relief

Vodafone Idea had earlier approached the Supreme Court on Friday, seeking urgent relief from AGR dues amounting to ₹30,000 crore, primarily arising from penalties and interest components.

The company emphasized that the entire telecom sector could collapse if additional government support is not provided.

The government’s 49 percent stake in Vodafone Idea came as a result of converting earlier dues into equity.

Bharti Airtel Files Similar Plea

Following Vodafone Idea’s petition, Bharti Airtel also submitted a plea seeking a waiver of its AGR dues. Airtel argued that relief should be granted equally to all telecom license holders to ensure a non-discriminatory approach.

The Supreme Court, however, dismissed the petition and repeated its stance, labelling it “shocking” and “misconceived.”