Reliance Jio threat: Vodafone Idea’s Rs 25,000 crore war chest may not be enough, says report

Even as we continue to see intense competition in the telecom space spearheaded by Mukesh Ambani-led Reliance Jio, Vodafone Idea’s latest rights issue for up to Rs 25,000 crore will not be enough to turn the firm self-sufficient, according to a report. Unlike Bharti’s fund raise, which will help it to deleverage the balance sheet significantly, Vodafone Idea’s estimated annual capex requirement and interest burden of over Rs 20,000 crore in FY21 may not be fulfilled even with an optimistic EBITDA of Rs 12,600 crore, noted a Motilal Oswal report. “Thus, without an ARPU increase, it may need another round of fund-raise to survive. This highlights Vodafone Idea’s desperate need for ARPU accretion over the next two years to survive without incremental funding, which could be seen as an advantage by competitors,” the research firm said in a report.