Without funds, Vodafone Idea staring at slow death, says analysts

Vodafone Idea (Vi) is staring at a “slow death” if it fails to quickly raise $3.5-5 billion (₹26,000-37,000 crore) that it urgently requires to meet stiff payment obligations, including adjusted gross revenue (AGR) dues, and also invest in 4G networks, analysts said.

On Saturday, cash-strapped Vi’s June quarter losses widened to ₹7,312.9 crore from ₹6,985.1 crore in the previous three-month period, stung by a mix of higher interest costs and heavy customer losses. Its quarterly revenue fell 4.73% sequentially to ₹9,152.3 crore and average revenue per user (ARPU)—a key performance metric—fell to ₹104 from ₹107. Vi, in fact, reported its lowest quarterly revenue in more than two years.

“Vi needs $3.5-5 billion of funding within the next three to six months as it must be able to pump in at least $1.5-2 billion annually towards network capex, even after meeting immediate AGR and spectrum payment commitments, failing which its customer losses could rapidly accelerate to around 15-20 million a quarter, leading to an inevitable slow death,” Nitin Soni, senior director at global ratings agency Fitch, told ET.

Soni said Vi’s ₹940 crore network capex in the June quarter, if annualised, translates to a paltry ₹3,760 crore or around $500 million. “This is way too little to even maintain Vi’s pan-India mobile network, let alone holding on to 4G users and competing effectively with stronger rivals, Jio and , who are both investing over $3 billion in network capex annually”.

The telecom JV between UK’s Vodafone and India’s Aditya Birla Group lost as many as 12.3 million customers in the April-June period, reducing its overall user base to 255.4 million.