Trouble for Vodafone Idea seems to keep mounting. Motilal Oswal has reiterated its Sell recommendation on Vodafone Idea with a price target of Rs 6 per share. This implies another 8% downside for the Vodafone Idea share price from current levels. The telecom major’s EBITDA margin contracted 50 bps QoQ (35 bps above) to 41.8%. The brokerage house believes that the decline in subscriber base could be even higher and its capex plans could be in jeopardy.
Motilal Oswal on Vodafone Idea: Subscriber loss the big concern
Operationally, Vodafone Idea’s subscriber losses moderated further to 0.5 million in Q1 from 1.6 million in Q4. The average revenue per unit, however, inched up 0.6% QoQ to Rs 165 (+13% YoY). The telecom company also continued to lose market share as wireless revenue remained flat QoQ compared to 3% QoQ growth for peers.
As per Motilal Oswal estimates, “Vi lost a further 20 bps QoQ (110 bps YoY) in subscriber market share (SMS) and 30 bps QoQ (140bp YoY) in revenue market share (RMS) among the three private telcos.”
Vodafone Idea: Capex moderating
Not just that – After a record high capex in Q4FY25, Vi’s capex moderated to Rs 2,400 crore in Q1. The stark decline can be assessed when compared to the Rs 4,200 crore capex in Q4. The management indicated a capex of Rs 2,500-3,500 crore in Q2FY26, while future capex plans remain contingent on the successful closure of debt raised by the company.
Motilal Oswal on Vodafone Idea: Fund raising elusive
Though Vodafone Idea continues to engage with lenders, Motilal Oswal pointed out that its plans to tortoise funds “remained elusive thus far.”Despite equity infusion and acceleration in network capex, “Vi has continued to lose market share to peers,” they added.
Motilal Oswal on Vodafone Idea: AGR relief still a big worry
Motilal Oswal also pointed out that “tariff hikes do not benefit Vi as much as its peers.” Vodafone Idea’s revenue grew a modest 6% YoY, translating into an annualized increase of Rs 2,200 crore Vs significant higher revenue for its peers. Bharti Airtel reported Rs 19,500 crore revenue and Reliance Jio’s revenue came in at Rs 14,000 crore.
In the absence of relief on AGR dues and with Rs 16,400 crore in annual repayments starting in March next year coupled with the closure of debt, Motilal Oswal pointed out that “Vi’s planned capex of Rs 50,000-55,000 crore remains in jeopardy, potentially resulting in higher subscriber churn.”