AGR Relief Opens Loan Window for Vodafone Idea; Can Its 3-Year Plan Win Banks?

A State Bank of India-led consortium is weighing a ₹25,000-crore debt funding proposal for Vodafone Idea (Vi), signalling a cautious but notable improvement in lender sentiment toward the struggling telecom operator. The development, reported by the Economic Times, comes days after the government slashed the company's adjusted gross revenue (AGR) dues by 27%.

Vodafone Idea, India's third-largest telecom operator, is seeking a ₹25,000-crore term loan along with an additional ₹10,000 crore in short-term working capital. Following, the government's decision, the company's stock responded positively, surging nearly 10% in early trade on Monday following the AGR announcement.

A Major AGR Reprieve

The Department of Telecommunications (DoT) had set up a committee to reassess the company's AGR liability, which was initially pegged at ₹87,695 crore as of December 31, 2025. Following reassessment, the dues were revised down by approximately ₹23,650 crore to ₹64,046 crore. Crucially, Vodafone Idea has also been granted a five-year moratorium on these payments, with nearly 99% of the dues payable between FY36 and FY41 in two phases over a decade. The absence of interest accrual during this period, combined with the extended repayment window, significantly improves the company's near-term liability profile.

Bankers reportedly said the AGR relief is a positive development as it allows Vodafone Idea to redirect focus toward network investment rather than managing government dues. However, lenders remain cautious. The company has steadily lost market share to rivals Reliance Jio and Bharti Airtel, and banks want greater clarity on its ability to service future obligations before committing fresh capital.

Discussions between banks and Vi have been ongoing since AGR dues were frozen in January, according to the report. SBI, while leading the consortium, has made clear it does not wish to be the sole lender, placing the onus on Vi to bring more banks on board.

An Ambitious Turnaround Plan

On its part, the company has laid out an ambitious three-year turnaround plan. It is targeting capital expenditure of ₹45,000 crore over the next three years to upgrade its network, achieve 5G parity in key markets, and drive revenue growth. This is in addition to the ₹18,000 crore already invested. The company is aiming for double-digit annual revenue growth and a threefold increase in EBITDA over the same period, which it believes will allow it to service pending spectrum dues organically.

Those spectrum dues are not insignificant, Vi faces payments of ₹7,000 crore in FY27, ₹15,000 crore in FY28, and ₹28,000 crore in FY29, adding to the financial pressure the company must navigate over the coming years.

Bankers acknowledged that while the AGR relief marks a meaningful step forward, Vodafone Idea still needs to demonstrate a stronger revenue-generating capability, particularly by improving revenue per user, before lenders feel comfortable scaling up their exposure, the report added. The backing of the Aditya Birla Group as a promoter is seen as a reassuring factor, but banks are unlikely to move decisively until there is greater operational and financial visibility.