Losing Ground: Despite relief, Vodafone Idea revival uphill battle

The telecom revival package may have provided relief to financially stretched Vodafone Idea (VIL), but the telecom player may remain a fragile entity with a declining subscriber base given its inability to catch up with Bharti Airtel and Reliance Jio on network capabilities and service offerings.

“The relief measures may allow VIL to continue as a going concern but absence of relief on balance sheet or profit or loss may rule out any meaningful equity value creation. Moreover, VIL may continue to lose subscribers as it remains behind Bharti and Jio on network capabilities (4G/5G) and service offerings (subsidised handsets, bundled plans, etc). Our calculations suggest that VIL may require Arpus (average realisation per user) of Rs 300-500 at different levels of subscriber base to manage its liabilities even after converting deferred amount to equity post four years of moratorium,” Kotak Institutional Equities said in its report.