Vodafone Idea 's promoters have taken a significant step toward resolving legacy financial obligations by earmarking 3.28 billion equity shares worth ₹3,529 crore. This move addresses liabilities stemming from the 2017 merger between Vodafone India and Idea Cellular, providing a structured path for settlement.

Revised Recovery Structure

The telecom operator amended its agreement with Vodafone promoter group on Wednesday to secure recovery of nearly ₹5,836 crore in total liabilities. The comprehensive settlement structure combines both cash and equity components to ensure complete resolution.

Share Allocation Details

Three Vodafone group promoter entities have committed shares under this arrangement. The earmarked equity represents 3.03% of Vodafone Idea's total equity capital, with specific allocations across the participating entities.

Operational Framework

The promoters will retain legal and beneficial ownership of the earmarked shares while facing specific restrictions. They cannot sell, transfer, dispose of, or create liens on these shares except as outlined in the amended agreement. The shares will be sold over a five-year period, with net proceeds flowing directly to Vodafone Idea.

Legacy Liability Mechanism

This arrangement operates under the contingent liability adjustment mechanism (CLAM) built into the original merger agreement. CLAM was designed to address pre-merger legal, tax, or regulatory liabilities that might emerge post-merger. The original mechanism was set to expire on June 30, 2025, later extended to December 31, 2025, before the current revision was implemented.

The structured settlement provides Vodafone Idea with a clear timeline for recovering substantial amounts while offering promoters flexibility in meeting their obligations through a combination of immediate cash payments and phased equity liquidation.

Vodafone Idea shares rose 1.64% to ₹11.79 on Friday afternoon, continuing their recovery from recent sharp selloffs despite ongoing analyst concerns about the telecom operator's financial health. The stock hit its 52-week high of ₹12.80 on 31st December, 2025, reflecting the volatile trading pattern that has characterized the company's recent performance.

Government Relief Package Details

The Union Cabinet recently approved a significant relief package for Vodafone Idea, freezing the company's ₹87,695 crore AGR (Adjusted Gross Revenue) dues. The package includes repayment deferment to FY32-41 over a five-year interest-free moratorium, providing temporary breathing room for the financially stressed telecom operator.

However, contrary to market expectations of at least a 50% waiver, no principal haircut was provided on the pending AGR liabilities, limiting the relief's impact on the company's overall debt burden.

Analyst Ratings and Financial Concerns

Despite the government relief measures, major brokerages maintained cautious stances on Vodafone Idea's prospects. Emkay Global maintained its "Sell" rating with a target price of ₹6, highlighting the company's extremely high leverage as a primary concern.

Emkay analysts noted that Vodafone Idea's pre-IndAS116 annualised EBITDA stands at just ₹8.98 billion, representing merely 6.7% of its spectrum debt. The company maintains a cash balance of ₹30.80 billion as of Q2FY26, while management has guided for capex spending of ₹75-80 billion for FY26.

Debt Obligations and Future Challenges

The company faces substantial financial pressures beyond the AGR dues. Vodafone Idea has ₹1.20 trillion in deferred spectrum payment obligations scheduled between FY26 and FY44, creating long-term repayment challenges.

Emkay analysts stated that current EBITDA levels are insufficient to meet capex requirements or spectrum debt repayment obligations, emphasizing that further capital infusion will be crucial for the company's long-term sustainability.

Market Activity and Future Outlook

Trading volumes were notably heavy, with 11,854 lakh shares changing hands during the session. However, delivery stood at just 20.97%, indicating significant speculative interest rather than long-term investment positioning.

The Department of Telecom plans to form a committee to reassess AGR dues within 6-8 months, potentially offering scope for future liability reduction. This development could provide additional relief depending on the committee's findings and recommendations.