Vodafone Idea’s stock increased by 10% to a peak of Rs 7.67. In spite of this, the stock has lost 7% in the last month.
After the Cabinet accepted a proposal to eliminate the bank guarantees (BG) that telecom operators were needed to offer for spectrum purchases up until 2022, shares of Vodafone Idea Ltd (VIL) and Bharti Airtel Ltd both increased by 10% in Tuesday’s trading. Given that it owes the government more than Rs 24,700 crore, which was due between September 2024 and February 2025, Vodafone Idea is thought to have benefited the most. They proposed that obtaining BG exemptions is another requirement for VIL’s debt increase.
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Following the announcement, Vodafone Idea’s stock increased by 10% to reach a peak of Rs 7.67. In spite of this, the stock has lost 7% in the last month.
In Q2, Vodafone Idea’s net debt (excluding leases but including interest accrued and not due) climbed sequentially by Rs 9,300 crore to Rs 2.12 lakh crore due to spectrum acquisition and past-due vendor and bank repayments. For postponed spectrum (Rs 1.52 lakh crore) and AGR dues (Rs 70,300 crore), VIL owed the government Rs 2.23 lakh crore.
The main conclusions from the post-results conference call with the Vodafone Idea management, according to a note dated November 15, were that VIL has mainly lost its users to BSNL as a result of pricing hikes announced in July 2024, but that the trend has begun to reverse starting in August.
Over the following two quarters, Vodafone Idea management anticipates that the full effects of the pricing increases will become apparent. By Q4FY25, VIL would begin rolling out 5G in strategic regions. The management also proposed that VIL aim to reach 120 crore 4G users by September 2025E.
In Q2FY25, VIL closed 19,700 3G stations and added 42,000 4G sites. For 2HFY25, the capital expenditure was estimated to be Rs 8,000 crore, and for the next three years, it was Rs 50,000-55,000 crore.
In order to securitize spectrum installments, Vi has appealed to the DoT to waive the bank guarantee (BG) requirement for Rs 24,700 crore, which must be submitted between September 2024 and February 2025. We think that obtaining BG exemptions is also a requirement for Vi’s debt increase,” MOFSL stated in a previous note.
Dependency According to past auctions, Jio’s yearly BG requirement is approximately Rs 4,000 crore, whereas Airtel’s is approximately Rs 3,000 crore. In order to reduce interest expenses, Jio and Airtel have both begun making prepayment installments on previous spectrum dues.
