Vodafone Idea shares jump 12% on buzz of $1 billion rescue bid, extend 3-day surge

Shares of Vodafone Idea surged as much as 12.5% on Friday to Rs 7.45 on the BSE, extending a three-day rally, after The Economic Times reported the Indian government is seeking a strategic investor willing to inject $1 billion into the debt-laden telecom operator.

The stock has climbed more than 14% over the past three sessions, nearly 15% in the past five days, and 5% in the past month. Despite the rebound, shares remain down 8% in the past six months and 10% so far in 2025.

Government’s investor push

The Economic Times reported on Thursday, citing people familiar with the matter, that the Centre is scouting for a strategic investor to buy a 12–13% stake in Vodafone Idea for over Rs 8,800 crore. Promoters Aditya Birla Group and the U.K.’s Vodafone may dilute part of their holdings, while the government, which holds a 48.99% stake after converting past dues into equity, plans to stay invested.

Officials told ET that options are being deliberated for both domestic and foreign investors who can provide capital and play an active role in operations. The government expects the new investor to bring in fresh ideas alongside funds. Potential suitors have been identified, and discussions are expected to accelerate in the near future.

AGR relief on the table

The government is also weighing relief measures on Vodafone Idea’s adjusted gross revenue (AGR) dues. The Department of Telecommunications has examined proposals such as extending the repayment tenure to 20 years from the current six, replacing compound interest with simple interest, or charging a token annual amount until a broader resolution is reached. Officials have said some form of relief is expected before the next instalment becomes due in March 2026.

The intent, according to officials, is to ensure the survival of the company, given the government is the single largest shareholder and would be most exposed if the operator collapses.

Debt burden

Vodafone Idea has one of the heaviest debt loads in the industry. As of March 2025, it owed Rs 83,400 crore in AGR dues, with annual repayments of around Rs 18,000 crore scheduled to begin next year. Its total debt, including deferred spectrum and AGR liabilities, stood at about Rs 1.99 lakh crore as of June.

Of this, AGR instalments due in FY26 total Rs 16,428 crore, while deferred spectrum payments by June 2026 amount to Rs 2,641 crore, according to regulatory filings.

The company’s financial position remains precarious. As of June, it had Rs 6,830 crore in cash and bank balances, raising concerns that without relief or fresh funding, it may not survive.

Fibre monetisation bid

Separately, Vodafone Idea has sought a no-objection certificate from lenders led by State Bank of India to pledge its 315,000 km fibre optic network in order to raise nearly Rs 7,000 crore from private credit funds for capital expenditure. About half the fibre network is self-built, while the rest is outsourced.

The telco has made several attempts in the past to monetise these assets, which were valued at Rs 10,000–11,500 crore in 2023. However, banks have been reluctant to extend fresh loans, citing the bulk of its liabilities being dues to the government.

Strategic stakes

Currently, the government holds 48.99% of Vodafone Idea, while Vodafone owns 16.07% and Aditya Birla Group holds 9.5%. The company employs more than 18,000 people and has a subscriber base of nearly 198 million.

Officials have emphasised that preventing Vodafone Idea’s collapse is critical for India’s telecom sector, as its failure could leave the market close to a duopoly.

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

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