Moondra takes over as CEO, has a mammoth task ahead

Akshaya Moondra will take over as Vodafone Idea chief executive on Friday, and with it, a large set of challenges. The biggest one is raising ₹20,000 crore from external investors, critical for the survival of India’s No. 3 wireless operator.

Moondra, who is presently chief financial officer, will also be looking forward to the government’s move to convert interest on spectrum dues of ₹16,000 crore emanating from the four-year moratorium into about 33% equity to be held by the government, which has further delayed the completion of the external capital raise. The carrier is also expected to face stiff competition in the 5G arena with Airtel and Jio expected to launch services soon and ramp up nationally.

“We find Vodafone Idea structurally at a disadvantage when compared to Jio and Bharti given the lack of adequate spectrum and weaker balance sheet,” analysts at Bank of America said in a note.

“A further delay in the capital raise could lead to continued market share losses to its two stronger peers. There is also still considerable uncertainty on the ability of the company to meet its enhanced payments to the government after the four-year moratorium period ends (potentially ₹40,000 crore a year), which would require far more meaningful tariff hikes and/or further government relief,” analysts at Citi Research cautioned in a note.

Analysts also say that the company’s heavy debt, coupled with 5G spectrum purchase commitments from recent auctions, would create additional challenges in terms of leverage.

Vodafone Idea had gross debt of ₹1.99 trillion comprising ₹1.16 trillion or about 60% of deferred spectrum, ₹67,300 crore of AGR dues and ₹15,200 crore of bank debt, of which ₹5,000 crore is due for repayment by end FY23. “VIL has struggled to keep pace with 4G transitions with Jio and Bharti over the last three years. Its higher regulatory payouts from the judgement in the AGR case and higher spectrum outgo (post moratorium) also limit its ability to invest in the network for coverage and capacity,” said analysts at JP Morgan in a note.

Queries sent to Vodafone Idea on existing and upcoming challenges remained unanswered. Livemint