LIFE OF VI: HOW INDIA AVERTED A TELCO DUOPOLY

The inside story of how the Centre created a limited legal reopening to prevent Vi's collapse

- T Surendar and Jatin Grover

The Centre is the single largest shareholder in VI. The same state that had fought for decades to enforce AGR dues is now financially invested in the company's survival.

(REUTERS)

Vodafone Idea (Vi) should not be alive come 2026. By every conventional financial and legal metric, the company should collapse under the weight of its massive adjusted gross revenue (AGR) dues—₹83,400 crore at last count—with instalments of nearly ₹18,000 crore annually beginning March 2026. The company's cash flows are nowhere near adequate. Even its promoters, the Aditya Birla Group and Vodafone Group Plc, acknowledged that without extraordinary relief, Vi's fate was sealed.

Yet, in a twist that would have seemed impossible even a few months ago, India's government has not only become the single largest shareholder in Vi—with a 48.9% stake—but has persuaded the Supreme Court to permit something it had once explicitly prohibited: the recomputation of AGR dues up to March 2017.

The story of how this happened begins not with the latest Supreme Court orders but back in October 2019, when the court upheld the department of telecommunications' (DoT) interpretation of AGR, shocking the industry with demands far higher than what companies had provisioned.

What was this interpretation?

The telecom policy of 1999 introduced the concept of revenue sharing between telcos and the government. The government's share would include licence fees and spectrum usage charges. The system was arrived at as telcos couldn't pay the high spectrum charges upfront.