In FY26, the company’s dues will amount to approximately Rs 30,000 crore, with nearly Rs 28,000 crore owed to the government as AGR dues.
Vodafone Idea Ltd. aims to convert government dues for FY26 and FY27 into equity, potentially reducing shareholders’ stakes, stated Vodafone Idea CEO Akshaya Moondra during an earnings call.
Kotak Institutional Equities, in its latest note ahead of Vodafone Idea Ltd (VIL) March quarter results, emphasized the high-risk, high-reward potential for Vodafone Idea, contingent upon various factors such as government relief measures, competitive landscape moderation, and VIL’s execution to prevent further subscriber attrition.
Kotak’s base case excludes AGR dues waiver but anticipates potential upside of Rs 5 per share (52%) if waiver (Rs 35,000 crore) occurs. The brokerage believes Reliance Jio may partake in industry tariff hikes due to significant 5G investments, RoCEs moderation, FCF, and potential JPL IPO.
Kotak noted VIL’s recent fundraise and anticipated tariff increases may enhance prospects in the medium term, yet predicts significant cash deficits for the telecom operator. Vodafone Idea’s sustained recovery hinges on additional government relief measures. With GoI’s commitment to a 3+1 market structure, Kotak suggested potential reforms like moratorium extension, partial AGR dues waiver, and/or equity conversion of Vi’s deferred obligations.
“Besides government relief, Vi needs reduced competitive pressure. A more substantial tariff increase (Rs 10 monthly) might boost Vodafone Idea’s fair value by Rs 3 per share (28% upside). Additionally, accounting for a 3% subscriber market share decline for Vi from FY2024-27E, improved execution to prevent losses could enhance investor trust and generate additional gains,” stated Kotak.
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