ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Railways
  • World
    • Economy
    • Politics
    • Markets
  • Survey
  • videos
  • photos
  • More ...
    • VIDEOS
    • PHOTOS
BREAKING NEWS
  • Dalal Street Corner: Market ends flat even as FII selling nears exhaustion; what should investors do on Friday?
  • Exclusive: June GST collections estimated at Rs 1.37-1.39 lakh cr, sources tell Zee Business ahead of announcement on 1 July
  • Eknath Shinde sworn in as 30th Chief Minister of Maharashtra, Fadnavis becomes Deputy CM
  • Gold Price Today: Weaker Rupee to hold yellow metal slide domestically, amid strengthening Dollar; analyst suggests strategy
  • Monsoon session of Parliament to begin on July 18; to end on August 12
Read in App
Business News » Companies News

Can Vodafone Idea save itself from more losses?

Everything is out of control in the newly merged and largest telecom operator Vodafone Idea, as they not only continue to loss subscribers each coming month, but also market valuation, earnings and much more.

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
Can Vodafone Idea save itself from more losses?
Interestingly, rating agency CLSA while retaining its ‘Sell’ target on the company. Photo: Reuters

In the month of December 2018, Vodafone Idea lost about 2,331,627 subscribers, compared to lost of 6,526,579 subscribers in November 2018 and 7,361,165 subscribers in October 2018. In terms of market share, the company now holds 35.61% in latest month, as against 36.55% in October month. Meanwhile, Vodafone Idea’s share price has corrected massively since start of 2019. The company’s shares dropped by nearly 24% so far. Interestingly, rating agency CLSA while retaining its ‘Sell’ target on the company, has also explained few measures which Vodafone Idea can look into to save themselves. 

In order to deleverage it’s balance sheet, Vodafone Idea have planned to raise about Rs 250 billion through rights of issue, under which Vodafone and Aditya Birla Group will contribute Rs 110 billion  and Rs 72.5 billion respectively.

Despite this large equity raising/dilution (97% of market cap), CLSA estimate’s that Vodafone Idea’s gearing will still be out of control at 7x-13x over FY20-22.

Further CLSA said, “Assuming management’s guided capex of Rs270bn over FY19-20, no non-spectrum debt repayments and our forecast of a fourfold jump in Ebitda over FY19-21, the infusion in our estimate will still fund losses only till FY21, post which we estimate the company will again need to raise funds.”

For now a sell call! 

CLSA says, “While there is limited clarity on whether telcos can selectively close down operations and surrender spectrum as this has implications on government’s receipts from the sector, if allowed, this could help Vodafone Idea to bring leverage under control.”

“With Vodafone Idea’s pan-India operations and gearing out of control even after factoring in rights issue of Rs 250 billion, we retain SELL on Vodafone Idea with a target of Rs 27/share,” CLSA adds.

Meanwhile given high operating and financial leverage, stock’s valuations are highly sensitive to revenue assumptions. A 10% higher revenue estimate results in a 2.5x jump in fair value.

A new plan, by CLSA 

Vodafone Idea’s current situation warrants a strategic shift from being a pan-India operator in 22 circles to being a regional operator focused on 10 key markets. The remaining 12 markets form 28% of its revenues and are loss making at Ebitda level. 

By shutting operations in these markets, Vodafone Idea will not only boost its Ebitda by Rs 16 billion in FY20, but will also lower its spectrum debt by current Rs 300 billion (assuming no cash return by government on surrender of spectrum), which in turn could lower annual spectrum payments (interest and principal) by Rs 41 billion. 

This could lower Vodafone Idea’s free cash flow deficit to mere Rs 65-70 billion vs Rs 100-105 billion earlier and also lower its net gearing to 5x Ebitda by FY21.

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Vodafone Idea
Written By: ZeeBiz WebTeam
Updated: Thu, Feb 28, 2019
05:07 pm
Mumbai, ZeeBiz WebDesk
RELATED NEWS
Vodafone Idea defers Rs 8,837 cr AGR dues payment, gets option to pay interest via equity Vodafone Idea defers Rs 8,837 cr AGR dues payment, gets option to pay interest via equity
Vodafone Idea Board approves Rs 431 cr fund raise Vodafone Idea Board approves Rs 431 cr fund raise
Stocks to Buy: Sanjiv Bhasin picks Vodafone-Idea, Ambuja cement, Bosch, PI Industries for gains today; Check why! Stocks to Buy: Sanjiv Bhasin picks Vodafone-Idea, Ambuja cement, Bosch, PI Industries for gains today; Check why!
Vodafone Idea board to consider up to Rs 500 cr fundraising from Vodafone Group Vodafone Idea board to consider up to Rs 500 cr fundraising from Vodafone Group
Vodafone Idea may get Rs 20,000 cr boost from Amazon soon; stock jumps 10% Vodafone Idea may get Rs 20,000 cr boost from Amazon soon; stock jumps 10%

LATEST NEWS

GST Council Meeting: Full details of goods and services, where rates hiked or slashed

Stocks to Buy: Sandeep Jain recommends Tarsons Products for gains; lists fundamentals, top triggers

Garmin Forerunner 955 Solar, Forerunner 255 series smartwatches launched in India - Check price & availability

CCI approves proposed combination involving Google International LLC and Bharti Airtel Limited

Renault limited to 44.4% stake in Nissan under agreement, filing shows

GST Council Meeting Outcome: Big boost for Rakesh Jhunjhunwala's stock as sewage treated water gets exemption from GST

Rupee gains 5 paise to close at 78.98 against US dollar

Oppo Reno 8 series India launch soon; teaser released - All you need to know

HDFC NIMs to be under pressure for a quarter: Parekh

Nothing Phone 1 confirmed to come with Snapdragon 778G+ SoC on July 12 - Know more

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
© 2022. India Dot Com Private Limited. All Rights Reserved.
LIVE TV