Vodafone Idea Pursues Non-Banking Funding to Ensure Capex Continuity Amid Banking Uncertainties

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 mentioned banks need clarity on adjusted gross revenue (AGR) issues before lending. The company aims to secure a smaller portion of the Rs 25,000 crore needed to continue its capex cycle.

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Moondra highlighted ongoing discussions with banks for credit, noting their need for clarity on AGR matters. "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.

AGR Liabilities and Government Support

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 challenged the Department of Telecom's AGR definition. However, in October 2019, the Supreme Court ruled in favour of DoT, requiring telcos to pay all dues claimed by the government.

Moondra expressed confidence in resolving AGR issues with government support. "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 said.

Financial Performance and Subscriber Base

Vodafone Idea reported a consolidated loss of Rs 6,608 crore for Q1 2025 due to increased finance costs and government levies. Finance costs rose by about 7% year-over-year to Rs 5,892.8 crore. Licence fees and spectrum usage charges payable also increased by around 6% to Rs 947 crore during this period.

Despite subscriber decline slowing by 90% to 5 lakh in Q1 2025 compared to previous quarters, Vodafone Idea's total subscriber base stood at 19.77 crore by June 2025. This included a mix of 12.74 crore 4G and 5G users.

Network Expansion and Revenue Growth

The company invested Rs 2,440 crore in network improvements during Q1 2025. This investment helped reduce customer churn significantly compared to September and December quarters of 2024. Vodafone Idea launched 5G services in 22 cities and plans expansion across its priority circles by September.

Revenue from operations grew by about 5% year-over-year to Rs 11,022.5 crore in Q1 2025. This growth was driven by a rise in average revenue per user (ARPU), which increased by 15% from Rs 154 in June 2024 quarter to Rs 177 in June 2025 quarter.

The Vodafone Idea board approved Abhijit Kishore's promotion from Chief Operating Officer to Chief Executive Officer effective August 19. Kishore will succeed Akshaya Moondra as CEO after Moondra's three-year term ends on August 18.

The company needs to address its AGR liabilities through six equal instalments starting March 31, 2026. VIL has requested resolution before this deadline for bank funding clarity.

With inputs from PTI