Vodafone Idea’s future continues to hang in the balance, as analysts point out that adjusted gross revenue (AGR) relief is critical for the debt-laden telecom operator to secure much-needed bank funding. Despite some positive steps, such as the Department of Telecommunications (DoT) converting dues into equity and vendor support, experts believe these measures are not enough to make the company a safe bet for investors yet.
AGR dues still a major hurdle
While the government’s equity conversion has helped ease short-term financial stress, the telecom giant’s long-term survival and ability to invest in network upgrades still hinge heavily on AGR liability resolution. According to analysts from top brokerages, without relief on AGR dues, Vodafone Idea may find bank loans difficult to secure.
“Bank financing could remain elusive without AGR reprieve. In that case, an additional equity raise becomes the only path forward,” said a note from Kotak.
Capex expansion is limited by funds
Vodafone Idea’s capability to expand its network coverage and invest in better infrastructure remains constrained. Despite ongoing discussions with lenders, the lack of substantial external funding has left the company’s capex plans stalled.
“Vi is currently like a binary option—two extreme outcomes depending on government support,” Kotak analysts added.
The telco is reportedly in continuous talks with lenders to arrange for debt financing, but analysts caution that until AGR issues are resolved or more equity is raised, no significant improvement in financial stability or operations can be expected.
Equity raise could be the only way forward
With traditional funding routes appearing increasingly difficult, an additional equity infusion now seems like the only feasible strategy to plug Vodafone Idea’s funding gap. Analysts also note that subscriber base stability and fresh fund inflows are key indicators they will be watching closely before turning positive on the stock.
In conclusion, while the government’s involvement has provided some breathing room, Vodafone Idea’s ability to survive and compete in the rapidly evolving telecom landscape rests on how quickly and effectively it can overcome its AGR-related challenges and raise fresh capital.
