Vodafone Idea has called a conference call with investors and analysts on Monday to provide “an update on recent developments”. The call will be addressed by the company’s CEO, Akshaya Moondra, and CFO, Murthy GVAS, along with the senior management team.
The announcement comes a day after the Supreme Court dismissed curative petitions filed filed by Vodafone Idea and Bharti Airtel, seeking correction in arithmetical errors by the department of telecommunications in computing their adjusted gross revenue (AGR) dues arising out of a 2019 order.
The development saw Vodafone Idea’s shares closing down 19.6% at Rs 10.4 on the BSE on Thursday. On Friday, the company’s shares had dropped below the Rs 10 mark to a low of Rs 9.79. However, later the shares recovered, closing up 0.87% at Rs 10.47.
The dismissal of the curative petition by the SC is a big setback for Vodafone Idea as there’s a huge gap between the DoT’s calculation and self-assessment done by the company with regard to the dues. For instance, DoT has computed the total dues at Rs 58,000 crore, whereas the company’s calculation puts it at Rs 21,500 crore.
At Rs 58,000 crore, Vodafone Idea’s AGR dues are the highest amongst operators, which as on date after adding interest, has gone up to Rs 70,320 crore.
Two key questions are expected to be raised by analysts at the conference call. The first may relate to the company’s plans to raise Rs 25,000 crore through debt financing. This the company had earlier announced as part of its fund raising plans, as part of which it recently raised Rs 20,000 crore in equity through a combination of a follow-on public offer and capital infusion from promoters.
The second question may relate to how the company expects to pay its AGR dues once the moratorium ends in September, 2025. Vodafone Idea had earlier said that it may urge the government to extend the same by a few more years or convert the dues into equity.
Once the moratorium on AGR and spectrum dues ends in September 2025, Vodafone Idea will need to pay Rs 29,100 crore by the end of March 2026, and Rs 43,000 crore annually from FY27 till FY31.
According to Kotak Institutional Equities, the company could see a cash shortfall of Rs 10,400 crore over FY25-27 and Rs 74,000 crore over FY28-32.
“This is a clear negative vis-à-vis expectations of some AGR relief and also as concerns on the company’s ability to service its government dues will once again surface after the ongoing moratorium ends in September, 2025. However, we do not believe this impacts the ability of the company to continue with its planned network investments in the near term,” Citi Research said in a note on Friday.
“We note that VIL’s AGR fine would have reduced from $8.4 billion to $3-4 billion, freeing cash-flows for incremental investments. Going ahead we expect cash-flows to be constrained leading to slower than earlier estimated growth,” BofA Securities said.
According to an earlier report by Goldman Sachs, the company’s market share is expected to decline by 3% over the next 3-4 years, with the brokerage putting a target price of Rs 2.5 on Vodafone Idea’s shares.
According to Nomura, Vodafone Idea can generate an Ebitda of Rs 22,400 crore in FY26, and can use the same to partly meet government’s Rs 29,000 crore dues, and urge the government to convert the balance into equity.
At the end of the April-June quarter, Vodafone Idea’s gross debt (excluding lease liabilities and including interest accrued but not due) was at Rs 2.09 trillion. The gross debt comprises deferred spectrum payment obligations of Rs 1.39 trillion, AGR liabilities of Rs 70,320 crore that are due to the government, debt from banks and financial institutions of Rs 4,650 crore and optionally convertible debentures amounting to Rs 160 crore.
