Even as Vodafone Idea (Vi) is looking to do a follow-on public offer to raise ₹20,000 crore, analysts at CLSA warned that shares of the cash-strapped telecom operator could drop as much as 61 per cent to ₹5, if the company continues to see subscriber churn.

The latest data from telecom regulator, TRAI, reveal Vi reported a loss of one million subscribers to 221 million in February 2024 amounting to a 17-million loss over the past 12 months.

Low capex

Vi’s subscriber loss is due to low capex of ₹1,300 crore over nine months in FY24, down 54 per cent year on year and 93 per cent lower than Bharti Airtel’s India mobile capex of ₹19,300 crore. Meanwhile Vi’s equity raising of up to ₹20,000 crore is pending and will boost capex and enable the rollout of 5G services.

“Beyond capex and 5G rollout, Vi faces a financial crunch in FY26 when annual spectrum and AGR payments of $4 billion per annum will fall due, unless the government converts debt principal to equity at the end of the moratorium. We retain SELL on Vi with a ₹5 target price. Falling subs add risks to our forecasts and also with pending AGR case relief,” CLSA said in a report.

Vodafone Idea shares closed at ₹12.93 per share on the BSE on Wednesday.

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