Vodafone Idea Pursues Non-Banking Funding Sources to Ensure Capex Continuity Amid Financial Challenges

Vodafone Idea is seeking funds from non-banking sources to sustain its capital expenditure plans, according to CEO Akshaya Moondra. During the June 2025 earnings call, Moondra highlighted that banks need clarity on the adjusted gross revenue (AGR) issue before providing loans. The company aims to secure a smaller amount than the previously discussed Rs 25,000 crore to continue its investment cycle.

Moondra noted that Vodafone Idea is actively engaging with banks for credit. "I think what the banks are currently looking for is some clarity on the AGR front. So that is where we are engaged with the government. Given that the government has made the conversion, they are today the largest stakeholder in the company. Whether as an equity holder or any dues which are owed to any external party, we are quite confident that there will be a solution to AGR," he stated.

Funding and AGR Challenges

The company's AGR liability was approximately Rs 75,000 crore at the end of June 2025. Vodafone Idea, along with other telecom operators like Bharti Airtel and BSNL, had disputed the Department of Telecom's definition of AGR. The Supreme Court ruled in favour of DoT in October 2019, requiring telcos to pay all dues claimed by the government.

Vodafone Idea's board has appointed Chief Operating Officer Abhijit Kishore as CEO from August 19, succeeding Moondra, whose term ends on August 18. The company reported an outstanding net debt exceeding Rs 2 lakh crore and relies on Department of Telecom support for AGR-related issues.

Government Support and Financial Performance

Moondra expressed confidence in resolving the AGR issue with government assistance. "I think in the past, we have always seen that the government has been supportive. You look at 2019, deferment of spectrum installments, 2021 reforms package, 2023 conversion of government dues to equity, 2025 again conversion of used to equity. Generally, these actions have happened closer to the time when it is essentially needed," he remarked.

The company must pay its AGR liability in six equal installments after a moratorium period starting March 31, 2026. Moondra emphasized resolving this issue before March so banks can provide funding clarity.

Subscriber Base and Financial Losses

Vodafone Idea's network improvements with a Rs 2,440 crore capex reduced customer decline by 90% to 5 lakh during the quarter compared to previous quarters' losses of around 50 lakh. The total subscriber base reached 19.77 crore by June 2025, including a mix of 12.74 crore 4G and 5G users.

The company launched 5G services in 22 cities such as Mumbai and Delhi and plans expansion across its priority circles by September. Despite stabilizing subscriber numbers, Vodafone Idea's consolidated loss widened to Rs 6,608 crore in Q1 FY25 due to increased finance costs and government levies.

The finance cost rose by about 7% or Rs 374 crore year-over-year to Rs 5,892.8 crore from Rs 5,518.6 crore in June 2024 quarter. Licence fees and spectrum usage charges payable to the government increased by about 6% to around Rs 947 crore during the reported quarter from around Rs 892 crore a year ago.

Revenue from operations grew by about 5% to Rs 11,022.5 crore during this period from Rs 10,508.3 crore in the previous year, driven mainly by a rise in average revenue per user (ARPU) by 15% to Rs 177 from Rs 154 in June 2024 quarter.

With inputs from PTI