NEW DELHI: The Supreme Court on Monday dismissed petitions filed by Vodafone Idea (Vi), Bharti Airtel, and Tata Telecom seeking a waiver on interest, penalties, and interest on penalties related to their adjusted gross revenue (AGR) dues.
A bench of Justices JB Pardiwala and R Mahadevan expressed dismay at the petitions, calling them “misconceived” and stating that reputable multinationals should not approach the court with such demands.
While the bench clarified it would not stop any government-led relief, it offered no leeway through judicial intervention. Vodafone Idea, which owes Rs83,000 crore in AGR dues, warned that without relief or funding, it may not survive beyond FY2026.
The proverbial last straw
Subhendu Pattnaik, CMO, Covasant, told The Hindu BusinessLine that Vi’s situation is near terminal: “It was unlikely that the company would attract any new investor considering Vi’s mammoth debt.”
The annual AGR outgo of Vodafone Idea at Rs18,000 crore from FY26 will be nearly double its current cash generation of Rs9,200 crore.
Despite raising ₹Rs18,000 crore through an FPO in April 2024 and promoters infusing Rs1,980 crore, banks have refused fresh loans.
The government, after converting Rs36,950 crore debt into equity, has also ruled out further bailouts.
Voluntary bankruptcy?
Shriram Subramanian, Founder, inGovern, said the company has exhausted all options: “Shareholders have said they will not invest new funds. If the government had agreed to waive the dues, that could have helped. But now, both parties have done all they can.”
Experts caution that insolvency may yield minimal recoveries as Vi’s core assets – spectrum, subscribers, and infrastructure – are either replaceable or leased.
Former Airtel CEO says
Sanjay Kapoor, former CEO, Bharti Airtel, told CNBC-TV18 that Vi’s situation is precarious. “Neither Jio nor Airtel islikely to acquire Vi; they are gaining market share from Vi already. And the government won’t want to cross the 51 per cent stake mark – BSNL and MTNL are enough to handle.”
He noted that global operators are unlikely to invest in a loss-making third player in a duopoly-dominated market. “Vi would have approached all possible investors – nothing materialised.”
Onus now on government
Ketan Mukhija, Senior Partner, Burgeon Law, said: “With courts shutting the door, it’s up to the government to rethink telecom sector relief.”
Ajay Khatlawala, Managing Partner, Little & Co, added: “Further steps must now come from the executive branch. The crisis is systemic and requires fiscal and regulatory fixes.”
Citi, IIFL hint at backdoor relief path
A Citi Research note on May 20 called the new petitions “surprising,” speculating that rejection could pave the way for politically palatable, court-compliant government intervention.
IIFL Capital said the government could file a modification plea in the SC or extend payment timelines, potentially waiving up to 50 per cent of interest and all penalties.
It estimated Vi’s annual AGR burden could drop by $1.17 billion if such measures are adopted.
Still, even with relief, Vi’s FY26 operating cash flow (estimated at $1.48 billion) won’t cover dues and capex, IIFL warned. “A moratorium or further equity conversion may be inevitable.”
Accountability questions
BusinessWorld, citing industry sources, said the Department of Telecommunications (DoT) may convert another Rs40,000 crore of dues into equity, potentially raising the government stake in Vi to 75 per cent.
Critics say such a move – while maintaining promoter control – would dilute public shareholders and raise concerns of “corporate welfare.”
“The government is trapped,” a telecom analyst told BusinessWorld. “Vi’s collapse would disrupt 200 million users and 20,000 jobs, but more public money into a sinking company is financial insanity.”
Question of double standards
Experts pointed out that rivals like Reliance Communications were allowed to fail, and Tata Teleservices paid up Rs50,000 crore before exiting. “Why is Vi a sacred cow?” a financial strategist asked. “Promoters aren’t risking fresh capital. Taxpayers are funding this.”
