Other options being considered, such as allowing Vi to pay the adjusted gross revenue-based arrears over 20 years, instead of the current six, may still not provide enough cash flows for sustaining company operations beyond 2028-29, said government officials. They added that various options were being explored.
These include “extending the tenure of AGR payments from the scheduled six annual instalments of Rs 18,064 crore to over 20. But despite that, the long-term sustainability of the company remains in doubt,” one official said on condition of anonymity.
The Department of Telecommunications, based on the current and potential future financial situation of Vi, believes that if the company is required to pay the full Rs 18,064 crore instalment due by end-FY26, it would not have funds to meet the liability in FY27. Even if annual instalments are reduced to Rs 6,000-8,500 crore each by extending the payment period, it still would not bring any tangible benefits. In fact, given the telco’s cash flows, it may not meet the liabilities beyond 2028-29.
In a worst case scenario, the payment tenure could be as long as 50-100 years, said a second official.
At the end of March, the carrier’s cash and bank balance totalled Rs 9,930 crore.Following a request from Vi, the government converted Rs 36,950 crore of spectrum arrears into equity in March, becoming the largest shareholder, with a 48.99% stake. These arrears were related to pre-2021 spectrum auctions.Prior to the equity conversion, Vi shared its projections till 2030-31, which is the deadline mandated by the Supreme Court to pay the AGR dues. Since the government had given a four-year moratorium on payment of AGR and spectrum dues from FY22, Vi now needs to clear the entire arrears in six instalments, starting with the current fiscal year. Every year, the instalment has to be made by March 31.
Bleak Numbers
“The company had shown its inability to meet the post-moratorium payment schedule of spectrum and AGR payments during various meetings with DoT,” said a third official. Vi’s projected payment for FY26 was more than Rs 30,500 crore before the government converted part of the dues into equity.
“While the company can meet the liabilities in the current fiscal year, it won’t be possible starting FY27 unless it manages over Rs 25,000 crore loans from banks and financial institutions,” said an analyst tracking the telecom sector.
Brokerage firm Motilal Oswal has cautioned that absence of a relief on the AGR dues and absence of a breakthrough on the company’s efforts to raise funds through debt, could result in Vi facing an estimated annual cash shortfall of Rs 20,000 crore.
In Vi’s January-March earnings report, auditor SR Batliboi & Associates cautioned that the operator’s financial performance was hurt by its inability to generate cash flows that it needed to settle/refinance its liabilities as they fall due.
Vi reported a net loss of Rs 7,166 crore in January-March, wider than Rs 6,609 crore in October-December 2024. Its board has approved raising a further Rs 20,000 crore through equity or debt, for which the telco is in discussions with lenders.
The Rs 72,300-crore market cap company has seen its share price slide from nearly Rs 10 apiece in January to Rs 6.7 as of Friday.
“The group’s ability to continue as a going concern is dependent on support from the DoT on the AGR matter, successfully arranging funding and generation of cash flow from its operations that it needs to settle its liabilities as they fall due,” the auditor said.
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