Challenges abound at Vi with Moondra taking over as CEO

Mundra, who is currently the chief financial officer, would also expect the government’s move to convert interest on spectrum dues. 16,000 crore coming out of the four-year moratorium in about 33% equity to be held by the government, which has further delayed the completion of external capital raising. The carrier is also expected to face stiff competition in the 5G arena with Airtel and Jio looking to launch services soon and ramp up nationally.

“We find Vodafone Idea at a structural disadvantage when compared to Jio and Bharti, given the lack of sufficient spectrum and weak balance sheets,” Bank of America analysts said in a note.

“Further delay in raising capital could result in loss of market share to its two strong peers. There is still considerable uncertainty over the company’s ability (potentially) to meet its increased payments to the government after the four-year moratorium period ends. 40,000 crore per annum), which will require more meaningful tariff hikes and/or further government relief,” Citi Research analysts warned in a note.

Analysts also say that the company’s huge debt, coupled with 5G spectrum purchase commitments from the recent auctions, will create additional challenges in terms of leverage.

Vodafone Idea’s gross debt was 1.99 trillion which includes 1.16 trillion or about 60% of deferred spectrum, 67,300 crore of AGR dues and 15,200 crore bank loan, out of which Repayment of Rs 5,000 crore is due at the end of FY 2013. “VIL has struggled over the last three years to keep pace with the 4G transition with Jio and Bharti. Its high regulatory payout and high spectrum outgo (post moratorium) from the judgment in the AGR case also limits its ability to invest in the network for coverage and capacity,” analysts at JP Morgan said in a note.

Queries sent to Vodafone Idea regarding current and upcoming challenges remained unanswered.

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