 "Vodafone Idea zooms 10% amid report of Rs 14,000-crore fund raise plan")
Shares of Vodafone Idea leaped 10 per cent to Rs 8.48 apiece on the BSE in Wednesday's intra-day deals amid reports that promoters are planning to infuse funds in the debt laden telecom company.
At 9:53 AM, shares of the telecom services provider were ruling 5.6 per cent higher at Rs 8.14 per share as against 0.18 per cent dip in the benchmark S&P BSE Sensex. A combined 210.73 million shares had changed hands on the counter on NSE and BSE till the time of writing of this report.
Shares of peer firms Bharti Airtel were down 1 per cent, while those of Reliance Industries (parent of Reliance Jio) were up 0.3 per cent.
As per a report, promoters Aditya Birla Group (ABG) and UK's Vodafone Group Plc could likely infuse Rs 14,000 crore in the company. The amount, the report said, would be evenly distributed between them.
"The plan was submitted to the government earlier this month and that ABG and Vodafone Group will soon invest Rs 2,000 crore as fresh equity in the company," said a report by The Economic Times.
The report is in contrast to previous claims made by promoters wherein they had denied plans to infuse fresh funds in the company.
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Last month, British telecom giant Vodafone Plc had said that the carrying value of the Vodafone Group's investment in debt-ridden telecom operator Vodafone Idea Ltd (VIL) was nil. It had, however, added that VIL needed additional liquidity support from its lenders and intended to raise additional funding.
Meanwhile, in February this year, the government had approved the conversion of over Rs 16,133 crore interest dues of Vodafone Idea into equity as part of the reforms package announced by the government in September 2021.
Financial status
In the January to March quarter of FY23, Vodafone Idea (Vi) reported a consolidated net loss to Rs 6,418 crore on a year-on-year basis on the back of an increase in operating expenses. The net loss was however 2.2 per cent lower on a year-on-year basis due to revenue growth and an increase in 4G customers. On a sequential basis, the net loss reduced by 19.6 per cent.
Gross revenue in the fourth quarter of FY23 increased by 2.8 per cent YoY to Rs 10,531 crore while earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 9.4 per cent to Rs 4,210 crore. Operating expenses rose 13 per cent to Rs 6,321 crore on a year-on-year basis.
Average revenue per user (ARPU) remained flat at Rs 135 on a sequential basis and rose 8.8 per cent on a year-on-year basis.
Analysts at Nuvama Institutional Equities had increased their earnings estimate for Vi for FY24/FY25E by 3.9 per cent/3.8 per cent on lower interest expense.
They, however, maintained 'Reduce' with a target of Rs 6 as near-term outlook remained uncertain.
"The dual impact of continuing subscriber loss and high debt has put VI in a precarious situation. Capex continues to be minimal for maintenance requirements. Inability to expand 4G coverage and incur 5G capex is leading to subscriber share loss. Meanwhile, tariff hike in
the near term looks uncertain," they had said in a report, valuing Vodafone Idea at 8x FY25E EV/EBITDA.
Meanwhile, those at Kotak Institutional Equities have said in a June 14 report thatrRising competitive intensity (RJio’s aggressive family postpaid plans and unlimited 5G data offerings) to attract higher value subscribers and several key state/general elections over the next 12 months would likely delay tariff hike to June 2024 (after general elections).
"Delayed tariff hikes, while negative for the sector, would hurt Vi's survival hopes the most (faces Rs 5500 crore cash shortfall in FY24) and could lead to accelerated market share gains for Bharti and RJio at Vi’s expense," they added.