Will Private Credit Come to Vodafone Idea’s Rescue as Lenders Remain on the Fence?

Ahead of its quarterly results, Vodafone Idea is reportedly in talks with private credit firms to meet a small part of its over ₹50,000 crore capital expenditure requirement. The move comes as lenders remain hesitant to support the company, which is facing large adjusted gross revenue (AGR) dues to the government.

According to a Moneycontrol report, the Aditya Birla Group’s telecom arm is in early discussions with private credit funds including Davidson Kempner, Oaktree and Värde Partners to raise a small tranche of debt. The report describes this as a stopgap measure while talks for larger bank funding continue.

In 2024, Vi kick-started a major capex programme of ₹50,000–₹55,000 crore to expand its 4G and 5G networks and catch up with rivals such as Reliance Jio and Bharti Airtel. However, the company secured only about ₹7,440 crore in FY25, as banks were reluctant to fund a firm burdened with massive liabilities to the government over past spectrum payments and accrued interest.

Earlier this year, the government converted some of these dues into equity. Yet, as of March 2025, Vodafone Idea still owed the government a total of ₹1,94,000 crore, including ₹1,18,000 crore in deferred spectrum payments and ₹75,945 crore in AGR dues.

The schedule to pay ₹75,945 crore in AGR dues is set to commence in March 2026, when a payment deferment granted by the Supreme Court expires in September this year.

Earlier this year, the Supreme Court refused to grant any relief on the AGR dues, leaving the matter to the government. Vodafone Idea had approached the government seeking a waiver of interest, penalties, and interest on penalties linked to its AGR liabilities, but no announcement has been made so far.

In its annual report, Vi said, “Based on current efforts, the company believes that it will be able to get DoT support, successfully arrange funding and generate cash flow from operations.”

However, the auditor noted in the same report, “The company’s ability to continue as a going concern is dependent on support from the DoT on the AGR matter, successfully arranging funding and generating cash flow from operations to settle its liabilities as they fall due.”

In FY26, the company is due to pay ₹16,428 crore towards AGR dues and ₹2,539 crore for deferred spectrum obligations. These payments are to be made in six equal instalments.