The rating agency said the upgrade follows the government’s revision of Vodafone Idea’s adjusted gross revenue (AGR) dues earlier this year and the settlement of the contingent liability adjustment mechanism (CLAM) agreement with promoter Vodafone Group Plc, a report on Informist said.
According to ICRA, the revised AGR payment schedule will significantly ease the telecom operator’s cash flow pressures over the coming years. Under the new structure, Vodafone Idea will pay about ₹124 crore annually from FY26 to FY31, followed by around ₹100 crore per year between FY32 and FY35. The remaining dues will then be cleared in six equal annual instalments between FY36 and FY41.
The rating agency also highlighted that the CLAM settlement and promoter support from Vodafone Group will inject ₹2,307 crore of cash into Vodafone Idea over the next 12 months.
ICRA said the improved regulatory clarity and funding support are expected to revive Vodafone Idea’s long-delayed capital expenditure programme. The company plans to invest around ₹45,000 crore between FY27 and FY29 to strengthen its network by expanding 4G coverage in priority telecom circles, rolling out 5G services and augmenting overall capacity.
“Execution of the capex, alongside an expected industry tariff rationalisation over the next 12–24 months and improving network quality, is expected to support ARPU (average revenue per user) improvement and OPBDITA (operating profit before depreciation, interest, taxes, and amortisation) growth,” ICRA said.
The rating action also reflects Vodafone Idea’s continued nationwide presence in India’s telecom market, where it held nearly 17% subscriber share as of September 2025. ICRA further cited the backing of promoter groups — the Aditya Birla Group and Vodafone Group Plc — as a key supportive factor.
Additionally, the government’s earlier decision to convert ₹36,950 crore of spectrum dues into equity has improved Vodafone Idea’s financial profile and eased repayment obligations, the agency said.
Despite the improved outlook, ICRA flagged continued pressure on Vodafone Idea’s subscriber base. The company’s user count has fallen to around 19.2 crore as of December 2025, compared with 21.5 crore in December 2023, largely due to muted network investments in recent years.
“VIL’s ability to tie up bank debt to roll out the capex as per the plan, a timely support from the GoI (government of India), and promoters, along with a capex funding tie-up, remains the key credit monitorables. The ‘positive’ outlook reflects ICRA’s expectation of healthy revenue and profit growth following timely capex implementation and the possibility of a tariff hike, going forward,” ICRA said.
On a sequential basis, Vodafone Idea’s Q3 revenue rose 1.1% to ₹11,323 crore from ₹11,194.7 crore in the September quarter.
The company reported a net loss of ₹5,286 crore, narrower than the ₹5,524.2 crore loss in the previous quarter, aided by an exceptional profit of ₹1,078 crore. However, adjusted losses widened to ₹6,368 crore from ₹5,565 crore QoQ.
ARPU improved to ₹186 in Q3FY26 from ₹173 a year earlier, marking a 7.3% year-on-year increase, primarily driven by customer upgrades.
