Vi plans another Rs20,000 cr fundraise, remains hopeful of government support

Mint

31-05-2025

Vodafone Idea Ltd's board approved raising another ₹ 20,000 crore through a further public offering (FPO), private placement, or other permissible mode to stay afloat, it said in an exchange filing on 30 May after reporting losses for another quarter amid never-ending financial troubles.
India's third-largest telecom operator said it was confident of gaining government support, successfully arranging funding, and generating cash flow from operations, and announced that a Capital Raising Committee will evaluate and decide on the potential route of fundraising.
The debt-laden company declared its March quarter results days after pleading before the Supreme Court for a waiver of massive government dues as banks refused it further loans. The court had rejected the plea.
In the petition, the telco had said it would not be able to operate beyond the current fiscal year without bank funding, which remains elusive as lenders remain wary of its dues worth ₹ 84,000 crore linked to adjusted gross revenue (AGR).
Before approaching the court, the company had submitted a similar representation to the government, seeking a waiver of interest, penalty, and interest on penalty on its AGR dues, which was not entertained.
'In the company's view, this dismissal does not preclude it from further engaging with the Government of India based on its foreseeable cash flows for arriving at an appropriate solution on the AGR matter before the next instalment date,' the telecom operator said in its financial statement.
However, a government four-year moratorium on payments of AGR and spectrum dues for telecom companies, including Vodafone Idea, ends in September, making it even more difficult for the company.
In the absence of any relief, starting 31 March 2026, it must pay an annual instalment of over ₹ 18,000 crore for the next six years towards AGR and spectrum dues to the government. In 2025-26 itself, it will have to pay ₹ 16,428 crore towards AGR dues and ₹ 2,539 crore towards deferred spectrum dues.
Vodafone Idea said amounts pertaining to some of the years are subject to correction/revision due to the disposal of representations and any other outcome of litigation. The amounts will be finally determined by 31 December 2025 and are payable in six equal instalments after the moratorium period starts from 31 March 2026.
But first, it desperately needs an operational turnaround.
In line with the Street estimates, its net loss for the fourth quarter of 2024-25 widened sequentially to ₹ 7,166 crore from ₹ 6,609 crore. The same was ₹ 7,675 crore a year ago.
The sequential rise in losses can be attributed to an increase in expenses, especially finance costs, which include interest payments on debt and other liabilities. Finance costs, accounting for 59% of its revenue from operations, rose 9% quarter-on-quarter and 3% year-on-year to ₹ 6,471 crore.
An average of six brokerage firms' estimates had pegged losses at ₹ 7,162.5 crore.
Its revenue from operations rose 4% on-year to ₹ 11,014 crore, in line with estimates, owing to improvement in its subscriber mix and an increase in postpaid users. The revenue, however, was down nearly 1% sequentially owing to continuous subscriber loss, largely in the lower-end segment.
'This has been a turnaround quarter for us, marked by the highest average daily revenue in the past five years and a significant reduction in subscriber loss,' said Akshaya Moondra, chief executive of Vodafone Idea.
'Early indicators show improvement across key business metrics and with our ongoing investments, we are well placed to effectively participate in the growth opportunity offered by the Industry,' Moondra said, adding that the company remains engaged with lenders to secure debt financing to support our broader capex plans of ₹ 50,000–55,000 crore.
Owing to a rise in revenue on a year-on-year basis, Vodafone Idea's earnings before interest, taxes, depreciation, and amortisation (Ebitda) rose 7.5% to ₹ 4,660 crore. On a quarterly basis, Ebitda fell 1.1% due to an increase in expenses and a decline in revenue from operations.
Vodafone Idea declared its results late Friday night, after the bourses closed. Its shares closed 3.2% lower at ₹ 6.92 on BSE.
Even as Vodafone Idea has been losing subscribers for a long time now, the company's subscriber churn rate has slowed down during the March quarter. Compared to the loss of 5 million subscribers each in the September and December quarters, its subscriber churn slowed down to 1.6 million in the fourth quarter.
As of 31 March, it had 198.2 million mobile subscribers. Sequentially, its blended subscriber churn fell to 4.1% from 4.5%.
The company's 4G/5G subscribers rose to 126.4 million from 126 million in the quarter-ago period. The company's postpaid subscribers were 25.6 million, up from 25.2 million in the preceding quarter and 23.9 million in the year-ago period.
The telco has been improving its 4G services with network upgrades and has also started rolling out 5G, with Mumbai, Chandigarh, and Patna being the first circles. On 15 May, it launched 5G in Delhi and said it was targeting to expand the services in all 17 circles by August 2025.
However, analysts at BofA Securities said in a 7 April note that VIL (Vodafone Idea) was still some point away from showing positive net adds.
Its average revenue per user (Arpu), a key performance metric, rose marginally to ₹ 164 from ₹ 163 in the preceding quarter, in line with estimates.
Two fewer days during the March quarter caused a largely flat Arpu, offsetting the company's improved subscriber mix. Further, the impact of the July tariff hikes also ebbed.
In comparison, Airtel's India Arpu was flat at ₹ 245 in the quarter, whereas Reliance Jio's Arpu rose to ₹ 206.2 from ₹ 203.3 in the December quarter.
Vodafone Idea has been grappling with huge dues. As of 31 March, its total government dues stood at around ₹ 2 trillion, including ₹ 1.19 trillion in spectrum dues and ₹ 83,400 crore AGR dues.
Its outstanding debt from banks (including interest accrued but not due) was ₹ 2,345 crore. In March, the government offered another reprieve to the company by converting an additional ₹ 36,950 crore worth of statutory dues into equity. This was the second dues conversion that took the government's stake in Vodafone Idea to 49%.
On 2 June, at the earnings call, analysts and investors will closely watch for the company's commentary on the AGR dues, any clarity from the government on possible relief, fundraising prospects, the company's sustainability post-2025-26, and future tariff hikes.