Big relief to Vodafone-Idea amid insolvency threat as govt mulls options on Rs 840000 crore debt, says only two ways to…
In a major relief for Vodafone Idea (Vi)– India’s third-largest telecom services provider– the Central government is mulling to provide further relief to the telco on its regulatory outstanding dues of Rs 84000 crore. The government is concerned that the telecom provider will likely go bankrupt if executive support is not provided, and such a scenario would result in a duopoly in the Indian telecom sector, leaving Mukesh Ambani-led Jio and Sunil Mittal’s Bharti Airtel as the only two private players in the market.
Centre mulls options to save Vi from insolvency
As per a report by The Economic Times, the Union Telecom Ministry sees two methods to help save Vodafone-Idea from insolvency. These involve extending the repayment period for adjusted gross revenue (AGR) dues from the current six years to 20 years, and also shifting from compound to simple interest on the outstanding amount.
As per the report, the ministry is mulling another proposal under which Vi will be required to pay a designated annual amount of about Rs 1000 crore to Rs 1500 crore towards the dues, until a final resolution is reached on the company’s AGR liabilities.
Can’t have a duopoly says Scindia
Meanwhile, Union Telecom Minister Jyotiraditya Scindia has stressed the need for competition in the telecom market, saying that the sector requires cannot grow if there are only one or two major players left.
“It’s not good enough having a duopoly or one carrier or two carriers. India must have competition in every sector. India today is probably the only country in the world for competition in ISP domain,” the minister said at an event in Delhi, according to a Moneycontrol report.
Why govt came forward to save Vi?
The Central government owns a 49 percent equity stake in Vodafone Idea, which is the primary reason it wants to ensure that the telecom major stays afloat, because its downfall would mean a financial loss for the state, the report said.
According to reports, last month, Vi had told the government that it might not be able to operate beyond FY26 without support, adding that the company may be forced to file for insolvency with the National Company Law Tribunal (NCLT), citing surging operating costs and lack of support from banks.
Notably, despite a Rs 26,000 crore equity infusion and Rs 36,950 crore equity conversion from the Centre, Vi has claimed that it did not receive any support from the banks, and made a plea to the government for a bailout deal, after the Supreme Court refused to waive off its AGR dues.
The company faces significant payment obligations after its four-year payment moratorium ends in September 2025, and will have to pay Rs 12000 crore between September 2025-March 2026. Further, Vi is mandated to pay 43,000 crore annually for five years, from FY27 to FY31, to clear its outstanding dues.
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