Why Vodafone Idea Shares Crashed by 15% Despite Govt Relief on AGR Dues

Shares of telecom operator Vodafone Idea (Vi) plunged up to 15% during second half of the trade on Wednesday after reports of the government providing relief to the company began to surface. Notably, the telecom firm was trading in the green in the early hours of the session, rising by as much as 6% at one point.

However, at around 2.30 PM, Vi shares crashed over 15% to ₹10.26 on the BSE. The trigger was reports claiming that the Union Cabinet has approved a relief package that freezes the telco’s adjusted gross revenue (AGR) dues of ₹87,695 crore.

After market close, Vodafone Idea shares were down about 11% at ₹10.76 on the BSE, while on the NSE the stock closed at ₹10.67.

Why Vi Shares Crashed?

Analysts say the stock crashed due to investors’ expectations of a waiver of dues.

The decision ensures that the company will survive, but I think the total debt remains the same, said Piyush Panday, Senior Vice President (lead analyst) – institutional equities at Centrum India.

“See, investors are expecting maybe some sort of waiver on the dues side, maybe a write-off of certain dues,” he noted.

What's In Cabinet's new Relief Package?

An official announcement on relief for Vodafone Idea is still awaited. However, reports suggest the government has approved a five-year moratorium on the telecom operator’s AGR liabilities amounting to around ₹87,695 crore.

According to the reports, the Cabinet has agreed to freeze the AGR dues, with repayments deferred to the period between FY32 and FY41. In addition, the company will settle its outstanding AGR liabilities for FY18 and FY19 over the next five years.

Under the earlier repayment schedule, the Aditya Birla Group-backed telco was required to begin paying its dues from March 2026 in 10 equal instalments.

Reports further indicate that a Department of Telecommunications (DoT) committee may be set up to provide additional relief by reassessing and recalculating AGR dues, including a possible review of interest and penalty components.

The Cabinet's decision comes after the Supreme Court in October allowed the government to reassess all dues owed by the operator, including interest and penalties, up to FY17.

The company had repeatedly said that without relief, it may not be able to continue operations as it owes the government close to ₹2 lakh crore, including AGR dues, spectrum payments and interest.

Why Govt Keeps Helping Vi

The Cabinet’s move is reportedly aimed at protecting the government’s 49% stake in Vodafone Idea, enabling the company to clear its dues in an orderly manner, and preserving competition in the telecom sector.

The government is considering easing the burden on Vi by reducing or waiving parts of the interest and penalties on its dues, which account for a large portion of the company’s total liabilities.

Before the decision, earlier reports had claimed that the Centre was examining the possibility of granting the telecom operator a four to five year interest-free moratorium on statutory dues of more than ₹80,000 crore.

Since 2023, the Union Government has provided three relief packages, including the latest decision. In 2023, the government acquired a 33% stake in the company by converting statutory dues of over ₹16,000 crore into equity. Earlier this year, the government became Vi’s largest shareholder in March after converting ₹36,950 crore of dues into equity, raising its holding to nearly 49%.

The move is intended to keep the telecom market competitive under the government’s '2+1' strategy.

However, analysts say that without an external investor, sustaining the company will remain difficult.

“What needs to happen is that Vodafone Idea requires a large, long-term investor who can inject a significant amount of equity,” said Panday.

He added that this is especially important as the company is competing with much larger players that have stronger balance sheets, greater market share, and more pricing power. “Support is necessary to help the company stabilise,” he said.

What Vodafone Needs

The Cabinet decision comes at a time when the company is in dire need of additional capital to fund its 5G expansion plans. Vi expects to incur capital expenditure of around ₹7,500–8,000 crore by the end of FY26, as outlined by its CEO Abhijit Kishore during the November earnings call. Earlier this month, the company raised ₹3,300 crore through a bond sale.

In May, the company received board approval to raise up to ₹20,000 crore through equity or debt. However, reports claim that banks have been reluctant to fund its capex plans, citing the company’s large liabilities.

The relief is expected to reassure financial institutions about the company’s survival.

“However, from a shareholder’s point of view, it will be difficult for Vodafone Idea to generate meaningful returns,” said Panday.