Vodafone Idea Limited Not out of the woods yet

Research evidence excerpt

Vodafone Idea Limited Not out of the woods yet

ositive adds? The first capex

cycle started from 1QFY25 after the Rs180bn fund raise via FPO resulted in Key Changes (FYE Mar)

IDEA being able to arrest subs losses to an extent. However, industry subs have Prev Cur Δ

been flatlining, so to assume IDEA is able to take share away from Bharti/Jio Adj. EBITDA - 28E (Rs mn) 280,533 266,963 -4.8%

is too optimistic, in our view.

Quarterly Forecasts (FYE Mar)

• Promoter infusion. Promoter Aditya Birla Group has agreed to infuse Adj. EBITDA (Rs mn)

Rs47.3bn through an issue of Rs4.3bn preferential warrants (convertible into 2026A 2027E 2028E

Q1 46,121 48,911 62,141

one share each) at Rs11/share. 25% of the money should come post shareholder Q2 46,851 51,235 65,477

approval in 1HFY27 with the remaining 75% over the next 18 months.We Q3 48,170 55,669 68,941

believe this can support capex in the short term in the absence of bank funding. Q4 48,890 60,154 70,404

FY 190,032 215,969 266,963

• AGR relief. Government has reduced the AGR dues to Rs640bn from an

earlier Rs877bn, with payments scheduled over FY36-41. Style Exposure

• IDEA has still not received bank funding. IDEA still awaits bank funding to

drive the next leg of the capex cycle, which is crucial to arrest the subs losses

and move to net adds by investing in the network. It has outlined Rs450bn

capex over the next 3 years, of which Rs350bn will be funded by bank loans

(Rs250bn from bank funding, Rs100bn from non-funded facility).

• Spectrum payment can be taken care of. IDEA believes it can make

spectrum payments of Rs70bn/150bn/270bn over the next 3 years and do capex

through Ebitda of Rs500bn and Rs100bn coming from a contingent liability

adjustment mechanism (CLAM) and income tax settlement.

• Remain UW.