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“Our base case remains that (Vodafone<\/a>) Idea will be a going concern and we assume in the long term that a part of outstanding debt (dues on statutory payments) on spectrum and AGR will also be equitised by the government,” JP Morgan<\/a> said in a report.
After the moratorium period ends in the third quarter of FY26, Vi’s pay-out to the government will include the deferred payments granted in the September 2021 relief package. Kotak Institutional Equities estimates that its annual pay-outs would total around Rs43,000 crore, with Rs15,700 crore for the deferred spectrum base amount, Rs10,000 crore for interest on deferred spectrum payment due to the moratorium, Rs9,100 crore as AGR dues base amount and nearly Rs7,400 crore toward interest on the AGR dues deferral.
Out of the expected annual regulatory payment, “the deferred component of Rs 17,400 crore can potentially be converted into equity by the government”, Credit Suisse<\/a> said, adding: “VIL management did highlight the possibility of further stake increase by the government in case VIL is not able to meet its regulatory obligation.”
The government currently owns a 33.1% stake in Vodafone Idea<\/a>, after converting the telco’s interest dues into equity, with promoters, UK’s Vodafone<\/a> Group and India’s Aditya Birla Group, holding around 32% and roughly 18%, respectively.
Kotak said Vi had nearly Rs8,000 crore external dues coming up for repayment in next 12 months and around Rs15,000 crore in overdue vendor payables.
“As per management, Vi continues to engage with lenders for refinancing part of the upcoming debt repayments and with vendors\/GoI for more flexibility in payment terms for service\/licence fees,” Kotak said.
Kotak added that with the government’s keenness to protect a 3+1 player market structure (three private and one state-owned operators) and Vi’s significantly lower external debt (Rs13,000 crore in overall Rs2.3 lakh crore), it expects part of the loans to get refinanced, which could lead to improved payment terms for Indus Towers.
Vi’s cash crunch — it had a cash balance of Rs160 crore at December end — has meant it has been unable to invest meaningfully in expanding 4G networks and roll out 5G services, leading to consistent subscriber losses to rivals Reliance Jio<\/a> and Bharti Airtel<\/a>.
Vodafone Idea lost its subscriber market share by 0.65 of a percentage point in the fiscal third quarter, compared with 0.35 and 0.30 point growth for Airtel and Jio, respectively. The declining subscriber base also resulted in an on-quarter revenue market share loss of a quarter percentage point for Vi.