Vodafone Idea share price falls 5% ahead of Q4 results; firm top loser in subscriber market share

Vodafone Idea share price fell 4.7 per cent to Rs 10.60 apiece on BSE ahead of the January-March quarter of the financial year 2019-20 results. According to the BSE data, Vodafone Idea stands at 91st position in overall market capitalisation ranking with m-cap at Rs 30,833.07 crore. After much ups and downs in the stock price, Vodafone Idea shares have rallied 61.5 per cent from Rs 6.56 apiece in June so far. The sharp rally in the stock price during the first week of this month was fuelled by the reports that suggested Google is in talks to invest in the company for a 5 per cent equity stake. However, later on, Vodafone idea clarified saying as part of corporate strategy, the company is constantly evaluating various opportunities for enhancing the stakeholders’ value.

The Telecom Regulatory Authority of India (TRAI) released subscriber data for February 2020, after a delay of two months. According to the data, Vodafone Idea continued to lose its subscriber base with a 3.5 million reduction in gross subscribers to 326 million. Vodafone Idea’s gross and active subscriber market share fell to 28 per cent and 29.8 per cent, respectively. Following this, Vodafone Idea is leading the laggards in both gross and active subscriber market share. “We believe VIL’s continuous loss of subscribers is attributed to its sub-par network capability, in addition to its survival uncertainty, which hinges on the Supreme Court’s decision to defer the AGR liability with government support,” Motilal Oswal Financial Services said in a telecom sector update report.

Vodafone Idea’s mobile broadband (MBB) subscriber additions turned positive, according to the TRAI data. However, it still lagged behind at 0.3 million after witnessing a loss of 0.5 million in January 2020 and 1.4 million in December 2019, taking the total subscriber base to 118m. Still, its market share shrank 10bp MoM to 17.9 per cent, the brokerage firm said. Mukul Rohatgi, counsel for Vodafone Idea had said that the company doesn’t have enough money to pay its employees and meet expenses. “In our opinion, an equity infusion seems to be the only logical way to continue to keep VIL as a going concern,” Emkay Research said in a report. “This equity infusion can come from the promoter’s personal capacity or via a strategic investor. Consistent losses in the subscriber market share will restrict the conversion rate of tariff hikes, it added. 

Along with Bharti Airtel, the Supreme Court has asked Vodafone Idea to pay upfront a reasonable amount of AGR dues, backed by securities and guarantees, to consider their plea for a staggered payment spread over 20 years. The next hearing on this case is scheduled for the third week of July. As per the Department of Telecommunications (DoT), out of Bharti Airtel’s nearly Rs 43,000 crore total dues, the company has paid nearly Rs 18,000 crore. While the total dues of Vodafone Idea stand at Rs 58,254 crore, of which so far it has paid only Rs 6,854 crore.