Relief Package for Vodafone Idea May Pave Way for Government to Exit Stake; Sale Plans Under Review
- ByStartupStory | January 5, 2026
The Union government’s recent approval of a major financial relief package for cash-strapped telecom operator Vodafone Idea Ltd (Vi) could be laying the groundwork for a potential exit of its equity holding in the company, according to senior government sources. While no final decision has been taken on the mechanism or timing, discussions are reportedly underway on the possibility of divesting the state’s stake and attracting a private investor to take a controlling position.
The Cabinet on Wednesday approved an AGR-relief plan for Vi that freezes its hefty adjusted gross revenue (AGR) dues of around ₹87,695 crore as of December 31, 2025, and allows the telecom operator to defer payment over a long repayment horizon stretching into the next
decade. This has given the company greater visibility on its statutory liabilities, a key condition private investors had emphasised as essential before considering any fresh capital infusion.
Government sources told The Indian Express that two large corporate groups had shown interest in picking up Vi shares at different points, although they declined to name the potential bidders. For now, any exit by the government which currently holds just under 49 per cent stake following conversion of dues into equity would be structured only if it could be completed at a profit, they added.
The Centre had taken a nearly 49 % position in the company through earlier equity conversions triggered by deferred spectrum and AGR dues, making it the largest shareholder in the beleaguered telco. Vodafone Plc and the Aditya Birla Group remain significant partners, but the cash-burning nature of the business and mounting losses have intensified focus on how to stabilise Vi’s finances and attract fresh funds.
Vi’s financial stress has been a persistent concern for policymakers. Apart from massive AGR liabilities, the company has struggled with declining revenues and a costly 5G rollout, losing subscribers to rivals Reliance Jio and Bharti Airtel. The relief package comes after Vi sought clarity on its statutory dues from the Supreme Court, warning that without meaningful respite its survival and therefore the government’s investment could be at risk.
As part of the Cabinet’s decision, statutory dues for fiscal years 2018-19 will continue to be paid over a separate schedule, while the frozen portion as of December 31 is subject to reassessment by a government-appointed committee. That panel’s findings will be binding and could substantially revise the outstanding figure before new repayment terms take effect.
Government officials have previously stressed that ensuring a competitive telecom market is a priority, and that Vi needs to remain viable for there to be more than two dominant players in the sector. An exit strategy that brings in a strategic investor could help strengthen the operator’s market position and reduce the state’s direct involvement in commercial telecom operations.
However, any sale will depend on market conditions, investor appetite and negotiated valuation. The government has so far not taken a formal decision on whether it will divest its shares via an open offer, block sale or through engagement with sovereign wealth funds and private equity though earlier reports had indicated that such options were being explored.
For now, the AGR relief package provides some breathing room for Vi, but its long-term turnaround and the government’s eventual exit hinge on fresh capital, regulatory clarity and improved operational performance in an intensely competitive Indian telecom landscape.
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