Vodafone Idea Engages with Government for AGR Relief, Says CEO

Vodafone Idea’s CEO, Akshaya Moondra, recently addressed investors during a call following the company’s financial results for Q4 and FY25. He confirmed ongoing discussions with the government regarding the Adjusted Gross Revenue (AGR) issue, emphasizing that there are no barriers preventing government support. Moondra highlighted the challenges faced by the telecom sector, including low Average Revenue Per User (ARPU) and the need for a revised pricing framework to better reflect data consumption.

Ongoing Discussions with the Government

During the investor call, Moondra reiterated Vodafone Idea’s commitment to engaging with the government about the AGR matter. He stated, “As far as the government relief is concerned, I think we are engaged with the government… what the government will do, I cannot comment on their behalf.” This statement comes in the wake of the Supreme Court’s dismissal of Vodafone Idea’s plea for AGR relief. The company is seeking a waiver of approximately Rs 30,000 crore in dues, which is crucial for its financial sustainability. Moondra noted that the company has communicated to the Department of Telecommunications that its operations beyond FY26 would be unsustainable without government intervention.

Challenges in the Telecom Sector

Moondra pointed out significant challenges within the Indian telecom industry, particularly the low ARPU, which remains the lowest globally. He emphasized that the industry’s returns are currently below the cost of capital, indicating a pressing need for a revised pricing framework. Moondra suggested that higher data consumption should be charged at a proportionally higher rate, moving away from the existing pricing model. He also referenced the 2021 telecom reforms and the Supreme Court’s stance that policy decisions are within the government’s purview, suggesting that this precedent allows the government to implement necessary relief measures for the sector.

Financial Performance and Future Plans

Vodafone Idea reported a reduced net loss of Rs 7,166.1 crore for the March quarter, with revenue rising by 3.8 percent year-on-year to Rs 11,013.5 crore. For the entire fiscal year, losses narrowed to Rs 27,383.4 crore, down from Rs 31,238.4 crore in FY24. To bolster its financial position, the company’s board has approved a fundraising plan of up to Rs 20,000 crore, pending regulatory and shareholder approvals. The capital infusion could be raised through various means, including a public offer or private placement.

Subscriber Base Decline and Future Outlook

Vodafone Idea is grappling with a declining subscriber base, having lost 6.47 lakh mobile users in April, bringing its total to 20.47 crore subscribers, according to TRAI data. This decline poses a significant challenge as the company seeks to stabilize its operations and secure future funding. Moondra’s comments regarding the government’s 49 percent stake in Vodafone Idea, acquired through a dues-to-equity conversion, clarified that there is no intent for the government to take a board seat. This clarification is vital as the company navigates its financial challenges and seeks to engage with banks for future funding solutions.

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