The clarity on adjusted gross revenue (AGR) dues emerging from the supreme court order, Vodafone idea’s (VIL) board will be meeting on September 4 to consider fund-raising plans. The company has balance dues of Rs 50,400 crore which it needs to pay over the next 10 years as according to the SC’s directive.
Analysts agree that the company desires to raise funds for the same along with raising tariffs. The company’s management had also said in an investor call after the April-June quarter income that after there’s clarity on AGR dues payment, it would consider raising funds.
In a regulatory filing on Wednesday, Vodafone idea said, “A meeting of the board of directors of the company is scheduled to be held on September 4 to consider and examine any proposals for raising of funds in one or greater tranches by way of a public problem, preferential allotment, private placement, together with a qualified institutions placement or through every other permissible mode and/or a combination thereof as perhaps considered appropriate.”
The Vodafone Idea might need to pay Rs 5,040 crore upfront payment by March 2021 and thereafter its yearly payment, in keeping with estimates by way of Jefferies could be around Rs 6,800 crore, which would be 111% of its Ebitda. without the promoters infusing budget, the company might need its Ebitda to triple and Arpu to rise to Rs 275 from the current `114 and reduce its CAPEX, which becomes anyway at its historic low of `600 crores in Q1FY21. similarly, from FY23, the company might also need to begin paying its deferred spectrum instalments of around Rs 16,000 crore yearly. The government has provided telecom operators moratorium on the charge of deferred spectrum instalments for FY21 and FY22.
“Vodafone Idea will need significant equity infusion along with significant operational development to meet its cash flow desires over a medium period. Our analysis shows that despite Arpu recovery to Rs 170 and being able to stem lack of subscribers to 270 million with by FY23E, cash balance for VIL might be in a precarious situation through FY22E end.
The precarious position of the company financially can be gauged from the fact that it’s cash and cash equivalents stand at Rs 3,450 crore even as its net debt was at Rs 1.16 lakh crore as on June 30, 2020.
The company had posted one of its largest losses during the April-June quarter at Rs 25,467 crore, in large part due to provisioning for AGR dues. Operationally, VIL has continued to lose market share ― it lost 11.3 million subscribers during the April-June area to 279.8 million in total, which includes 1 million 4G subscribers taking the number to 104.6 million and general records subscribers declined by 3.8 million to 135.7 million.
