Govt scouting for investor willing to infuse $1 billion and pick up 12-13% in Vodafone Idea

The Centre is seeking to onboard a strategic investor that’s willing to commit $1 billion (around Rs 8,800 crore) into loss-making Vodafone Idea and take a 12-13% stake, officials familiar with discussions told ET . One official said promoters Aditya Birla Group (ABG) and the UK’s Vodafone will have the option to dilute their stake, as the government wants to stay invested for some more time.

“Options are being deliberated about the potential investor, either local or foreign, who can put in capital and also play an active role in running company operations,” the official said on the condition of anonymity. The government expects the new investor to take the loss-making telco forward with new ideas too.

This proposal, besides exploring ways of giving relief to the telco on its adjusted gross revenue (AGR) dues, underlines New Delhi’s efforts to ensure Vi’s survival amid its struggle to raise debt.

Potential Suitors Identified “ The investor has not been finalised but potential suitors have been identified, and talks are expected to pick up pace in the near future,” said a second official.

Currently, the government owns a 48.99% stake in Vodafone Idea, having converted some of its past dues into equity. ABG and Vodafone hold 9.50% and 16.07%, respectively.

The telco needs a lifeline this fiscal year-end, by when it needs to start repaying thousands of crores of its statutory AGR dues.

Broader relief for the company will also be considered, and both sets of options are being deliberated simultaneously, the officials said. “It will be difficult to get an investor without any relief on the AGR front,” said an industry executive .

Queries sent to Aditya Birla Group regarding the conversations around a potential strategic investor remained unanswered until the publication of this report, while Vodafone Group offered no comment.

On Wednesday, the company’s stock closed 0.9% higher at Rs 6.58 on the BSE, giving it a market cap of Rs 71,289.72 crore.

IN A HUDDLE

The talks around relief to Vodafone Idea are being handled at a broader level with involvement of the finance ministry, the Cabinet Secretariat, among others, the first official said. The government wants to ensure the company survives as it’s essential for the domestic telecom sector.

The Department of Telecommunications (DoT) earlier prepared a few options to provide relief to the telco on outstanding regulatory dues of Rs 84,000 crore, including interest and penalties, after Vi expressed its inability to pay.

Among the options suggested by DoT to provide relief were increasing the repayment tenure to 20 years from six years now, and simultaneously applying a simple interest on the outstanding amount instead of compound interest, or interest on interest.

Among the proposals was also another that involved charging a token amount of around Rs 1,0001,500 crore annually toward part payment of those dues until a final decision is taken on the broader AGR issue. Another option was to increase the moratorium for another four years in case no decision was taken in the coming months.

“The instalment of Vodafone Idea becomes due in March next year and some sort of relief is expected to be provided by that time,” said a third official.

BIG STAKES

The government’s intent is clear — to keep the company afloat. If Vodafone Idea folds up, New Delhi would be the biggest loser, given that it’s the largest shareholder, and a majority of the outstanding dues would come to the treasury.

Vodafone Idea had outstanding AGR dues to the tune of Rs 83,400 crore as of March 2025. As of June 30, its outstanding debt from banks was Rs 1,945 crore and deferred obligation toward spectrum, payable until FY44, and toward AGR—payable until FY31—aggregated to Rs 1.99 lakh crore. Of these, the AGR instalment due FY26 is Rs 16,428 crore and deferred spectrum payment payable by June 2026 is Rs 2,641 crore, regulatory filings showed.

At the end of June, its cash and bank balance totalled Rs 6,830 crore, raising fears that without any relief on the AGR dues, the company won’t survive.