Though the move will help improve Vi's cash flows, it needs to halt its subscriber base erosion, raise debt funding quickly and resolve the payment of AGR dues
Vi has been busy upgrading its subscriber base from 2G to 4G, providing more bundled offerings and higher value products to these subscribers.
Image: Indranil Mukherjee / AFP
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oss-making Vodafone Idea (Vi) will be able to breathe easy, but only just and not for long. The government has approved Vi’s request to convert Rs 36,950 crore spectrum liability into equity. It means the government’s stake in Vi rises to nearly 49 percent—without operational control—from 22.6 percent.
It will reduce Vi’s cumulative government payouts over the next three fiscal years (FY26-28) to around Rs 75,300 crore. The possibility of cash flows increasing for Vi and higher degree of government backing raises the prospects of completion of Vi’s pending debt-raising plan. The news brought cheer to Vi investors, with the stock closing 20.1 percent higher, or up Rs 1.37 at Rs 8.17 on the BSE on Tuesday.
But there are still some real concerns that Vi must face: Its revenues have risen only around 6 percent to Rs 11,360 crore in Q3FY25 from September 2023 levels, despite average revenue per user (ARPU) from tariff hikes rising 16 percent in the same period. Its customers are too price sensitive—the churn continues as it upgrades to 4G from 2G—and Vi has not been able to arrest its falling subscriber base for the past 26 consecutive quarters (see chart). Vi has been busy upgrading its subscriber base from 2G to 4G, providing more bundled offerings and higher value products to these subscribers.
Vi has a pending plan to raise debt of Rs 25,000 crore, which got stalled after a curative plea on AGR dues from telecom operators (including Vi), was rejected by the Supreme Court in September 2024. At its recent February 12, 2025 analysts meet, Vi CEO Akshaya Moondra said they remain “actively engaged” with banks to tie up for the debt funding programme, towards long-term network expansion. All these factors—arresting the declining subscriber base, a debt fund raise, any relief on AGR dues and improving revenues, operating efficiency and cash flows—are vital to Vi’s long-term survival.