Brokerage houses raise the red flag on Vi’s debts and subscriber loss

Post the declaration of Q3 FY24 results of Vodafone Idea Limited, analysts at brokerage houses have raised concern. The telco’s debt stands at Rs 2.15 lakh crore, and payment obligation of Rs 5,400 crore by December. CapEx is a dismal Rs 330 crore for the quarter as compared to Bharti Airtel’s Rs 7787 crore in India and total CapEx of Rs 9206 crore. Net loss for the quarter was Rs 6,986 crore.

“Vodafone Idea’s EBITDA generation (at Rs 8,600 crore annualised), while enough to meet repayment obligations over 12 months, is still meaningfully lower than what we estimate as required to close the network gap to peers, and we believe the firm’s market share erosion could continue,” said brokerage house Goldman Sachs in a note.

“The biggest risk is delays in 5G CapEx that can drive higher churn thereby accelerating subscriber losses. Our base case remains that Vodafone Idea will be a going concern and we assume in the long term that part of outstanding debt on spectrum and AGR will also be equitised by the government,” said brokerage house JP Morgan.

“Vodafone Idea continues to face significant uncertainty on meeting its repayment obligations to the government after the moratorium ends. The long overdue capital raise therefore remains critical,” said Citi Research in a note.

“Without significant fund raise, we do not see a case for Vodafone Idea’s revival,” said Kotak Institutional Equities.

CT Bureau