The six important questions that lie before Vodafone Idea as stock rebounds

Shares of Vodafone Idea Ltd., the debt-laden telecom service provider staged a rebound to reclaim their Follow-on Public Offer (FPO) price of ₹11 and even closed above that. In early Monday trading, the stock made an intraday high of ₹12.03, before giving up the gains.

According to media reports, the government is considering a four to five year interest-free moratorium on AGR liabilities for Vodafone Idea.

Once the moratorium ends, the company will have to pay the arrears over the next six years, according to those reports, which also state that the quantum of the liabilities could be cut by 50%.

With the stock staging a rebound, and a potential relief in the offing, here are six important questions that lie before the company:

Question One

The first and the most important question that lies before the company is how will the final AGR relief, if any, will impact Vodafone Idea's annual payment obligations starting from March 2026. The company is currently supposed to pay ₹16,000 crore annually for a six-year period, starting March 2026.

In case of any potential AGR relief, followed by a four-to-five-year moratorium, there will be no payments till financial year 2030.

Question Two

The second important question is in case there is any potential relief forthcoming, what happens to the company's plans on raising up to ₹25,000 crore via bank debt.

Question Three

Vodafone Idea has earmarked capex plans of between ₹50,000 crore to ₹55,000 crore going forward for its 5G coverage enhancement across the country.

The question is whether the company will need further equity fund raise to finance this ambitious capex plan?

Vodafone Idea had done India's largest follow-on public offer (FPO), through which it had raised ₹18,000 crore by issuing shares at ₹11 apiece. The stock has only managed to cross that price recently, after falling below it in mid-2024.

Question Four

Besides the AGR dues, Vodafone Idea's spectrum liabilities alone are well in excess of ₹1.2 lakh crore.

The question is whether the government will need to convert more dues into equity, and if yes, will it be able to do so without increasing its stake?

Multiple voices from the government, including Telecom Minister Jyotiraditya Scindia have told CNBC-TV18 that the government has no intention to increase its stake in Vodafone Idea beyond the current 49% and turn it into a PSU.

Question Five

What are the company's plans with regards to tariff hikes for its consumers?

Currently, Vodafone Idea's Average Revenue Per User (ARPU) is the lowest among its peers at ₹167.

In contrast, its peers like Reliance Jio (₹211) and Bharti Airtel (₹256), have their ARPUs well in excess of ₹200.

Question Six

And lastly, how does Vodafone Idea intend to close the gap with its competitors with regards to market share, 5G coverage and premium subscriber mix.

At the end of the September quarter, Vodafone Idea had 196.7 million subscribers and its subscriber addition has been in negative territory for the last few months, while Bharti Airtel and Reliance Jio have 364 million and 506.4 million subscribers respectively.

Shares of Vodafone Idea are trading 0.6% lower, having given up early gains on Monday at ₹11.57.