Even after Vodafone Idea renews its fundraising efforts, top analysts still remain cautious about the prospects for the ailing operator. 

Reacting to Voda Idea’s quarterly results for Q3FY23, Citi Research said, “VI’s overall leverage remains a significant concern, with considerable uncertainty on the ability of the company to meet its enhanced payments to the govt after the moratorium period ends (>₹40,000 crore as per management ); we, therefore, stay on the sidelines on the stock. Completion of the crucial capital raise could, however, improve VI’s ability to clear its overdue amounts to tower cos, with Indus a key potential beneficiary.”

Vodafone Idea, which is continuing to delay investments in 5G as it has not been able to raise funds yet, will launch its 5G network much later than its competitors. Credit Suisse maintained its underperforming rating for the company even after the Centre has converted its debt to equity. Credit Suisse said, “VIL’s net subscriber loss remained elevated at 5.8 million, leading to continued negative operating and financial leverage. We believe that VIL’s continued inability to invest in the network and a delay in the 5G rollout could accelerate market share loss in the near term.”

Also read: VIL’s subscriber base continues to decline for 21 months

Credit Suisse retained its cautious stance on VIL as it continues to cede market share to Airteland Jio in the near term. Further, cash flow and debt issues would worsen once the moratorium on regulatory payment ends. The company would need frequent (but required) equity infusions, with potential dilution to the shareholders, as per the credit rating firm. 

India Telecoms further added that Airtel and Jio heightened 4G and 5G capex will only heighten the risk for Vodafone Idea if it is unable to close its fundraising efforts. 

Also read: Private wireless network companies to invest $250 million by 2027: Nokia MBiT report

Vodafone Idea has renewed talks with banks regarding fundraising to pay off upcoming dues and re-start 4G and 5G capex. Banks had indicated that they will not extend any new credit to the company unless the Centre converts Vi’s dues into equity. While reports suggest that Vi’s discussions with banks have taken a positive turn since the Centre announced its equity conversion – even promoter Kumar Mangalam Birla is likely to infuse additional equity into the company; analysts believe that the company is not out of the woods yet. Vodafone is losing subscribers and market share every quarter, and Bharti Airtel and Reliance Jio have started deploying 5G services since October. The company is in dire need of a fundraiser. Even with additional funds, the road for recovery for Voda Idea is a long and uncertain one. 

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