Vi unlikely to renew 39.5MHz spectrum across six circles

Vodafone Idea (Vi) is unlikely to renew its 39.5MHz spectrum holdings in the 900MHz and 1800MHz bands across six circles, according to sources familiar with the development. The spectrum was allotted administratively,  without auction, to Aditya Birla Telecom back in 2006, and the holdings are set to expire on December 5, 2026.

What’s happening
Had Vi chosen to renew, it would have had to pay roughly ₹5,500-6,000 crore at base prices to retain the spectrum across the six circles: Mumbai, Bihar, Odisha, Andhra Pradesh, Assam, and Jammu & Kashmir. Vi has reportedly informed the Department of Telecommunications (DoT) of its decision not to renew.

The spectrum in question sits in bands prized for their propagation characteristics, 900MHz in particular is valuable for wide-area coverage because it travels farther and penetrates buildings better than higher-frequency airwaves. Letting a two-decade-old, administratively allotted holding lapse rather than paying to extend it is not routine housekeeping; it is a clear signal of where the company is choosing to commit capital, and where it is choosing to step back.

Notably, subscribers in the affected circles are not expected to see service disruption as a result of this decision.

Why it matters: The financial backdrop
The decision has to be read against Vi’s broader balance sheet. Vi,  the joint venture between India’s Aditya Birla Group and the UK’s Vodafone Group Plc,  has been operating under one of the most acute debt burdens in Indian corporate history, with total liabilities running to roughly ₹2 lakh crore, dominated by statutory dues to the government. Earlier this year, the DoT finalised a reassessment of Vi’s Adjusted Gross Revenue (AGR) dues at around ₹64,046 crore,  a 27 percent reduction from the earlier provisional figure of ₹87,695 crore, accompanied by a staggered repayment schedule stretching out to FY41. The government, through past conversions of interest on deferred dues into equity, is now Vi’s largest shareholder, holding just under 49 percent of the company.

Even with this relief, Vi is simultaneously trying to fund a stated ₹45,000 crore capital expenditure plan over the next three years to expand 4G/5G coverage and stem subscriber losses to Reliance Jio and Bharti Airtel. In that context, saving ₹5,500-6,000 crore by not renewing legacy spectrum in six circles is a fairly direct trade-off: freeing up cash for network investment in circles that matter most to revenue and subscriber retention, at the cost of relinquishing spectrum elsewhere.

Implications and potential impact
Because subscribers are not expected to face service disruption, the near-term consumer impact looks limited, likely because Vi retains other spectrum layers (such as 2100MHz, 2300MHz, or other 1800MHz holdings) in these circles that can absorb the load, or because usage on this specific legacy allocation had already been de-prioritized. Even so, the long-term coverage depth and capacity headroom in Mumbai, Bihar, Odisha, Andhra Pradesh, Assam, and Jammu & Kashmir could be affected, particularly in less-dense pockets where 900MHz has historically done the heavy lifting.

For the broader industry, the move is a fresh reminder that India’s telecom sector, despite tariff hikes and consolidation to three major private players, still has one operator whose survival strategy depends on selective retrenchment rather than expansion. It also puts a spotlight on spectrum utilisation policy: airwaves that Vi relinquishes would revert to the government’s pool, potentially to be reassigned via future auctions, a dynamic that could benefit Jio or Airtel if they choose to acquire that spectrum in those circles, further tilting competitive balance in markets Vi is stepping back from.

There is also a policy angle. The government, as Vi’s largest shareholder, has a direct financial stake in the company’s survival and performance, which creates an unusual dynamic: the same DoT that approves or denies spectrum-related relief is also, in effect, a part-owner exposed to the consequences of Vi’s retreat. This overlap could shape how future requests for relief, restructuring, or spectrum-related concessions are handled going forward.

Analysis: A pattern of selective retrenchment
This is not the first time debt overhang has forced tough network decisions in Indian telecom, but it illustrates a broader pattern in capital-intensive network industries globally: operators under financial stress tend to prioritize profitable, high-density markets and cede ground in areas with weaker returns, even when that risks long-term market share. Airtel, by contrast, has in the past opted to pay to retain spectrum nearing expiry in circles where it wanted continuity, underscoring how differently positioned balance sheets lead to divergent strategic choices even within the same regulatory environment.

The choice of circles is also instructive. Mumbai is a high-value metro circle, while Bihar, Odisha, Assam, and Jammu & Kashmir are traditionally lower-ARPU (average revenue per user) circles with thinner margins; Andhra Pradesh sits somewhere in between. Letting go of a legacy, non-auctioned 900MHz/1800MHz layer in this particular mix suggests Vi is making circle-by-circle calculations on where incremental spectrum spend delivers the weakest return, rather than treating spectrum renewal as a uniform, pan-India obligation.

For Vi, the coming months will be a test of whether a more selectively defended footprint can be sustained profitably, or whether this is the first of further such decisions as older spectrum layers come up for renewal in other circles. Either way, it adds to a growing body of evidence that India’s telecom market, while nominally a three-player contest, is increasingly shaped by the uneven financial capacity of its participants to hold onto spectrum, not just to win it at auction.
CT Bureau