‘Vodafone Idea’s capex plan unlikely to help regain subs; faces ₹20,000 crore annual cash shortfall’

Vodafone Idea (Vi) planned capital expenditure (CapEx) of ₹50,000-55,000 crore over the next two to three years is unlikely to significantly help the ailing telecom carrier regain subscribers that have migrated to rival Reliance Jio and Bharti Airtel’s networks, according to Motilal Oswal.

‘Vi continues to lose market share to peers due to lower ARPU translation, given its inferior subscriber mix and elevated subscriber churn,’ the brokerage firm said in a report, seen by ETTelecom.

‘Despite the likely capex, we believe regaining subscribers would be a tall ask for Vi, given its peers’ superior free cash flow generation and deeper pockets,’ it added.

Motilal Oswal estimated that Vi’s capex increased to ₹4,200 crore in Q4FY25, the highest since the merger of Vodafone and Idea Cellular, with the overall FY25 capex rising to ₹9,600 crore.

‘Despite equity infusion and acceleration in capex, Vi continued to lose market share to peers. On our estimates, it lost ~130bp in subscriber market share (SMS) and ~155bp in revenue market share (RMS) in FY25, among the three private telcos,’ the brokerage said.

In the fourth quarter (Q4) of fiscal year 2025, Vi’s net loss widened sequentially to ₹7,166 crore, from ₹6,609 crore in Q3FY25. Last week, its board of directors approved raising around ₹20,000 crore more, which is seen as crucial to investing in the expansion of its 4G and 5G networks and arresting subscriber churn.

The telecom joint venture between India’s Aditya Birla Group and the UK’s Vodafone Group Plc has been unable to control subscriber declines despite launching commercial fifth-generation (5G) services in key markets in the January-March 2025 quarter, including Delhi and Mumbai.

In the December 2024 quarter, subscriber base had fallen below the 200 million mark for the first time since its merger in 2019. In the March 2025 quarter, it further declined to 198.2 million.

‘We believe the company’s network investments remain contingent on debt raise, which, in turn, is dependent on continued support/AGR relief from GoI (₹200 bn+ (₹20,000 crore) annual cash shortfall over FY26-31E),’ the brokerage firm said.

According to the report, the stabilisation of Vi’s subscriber base, along with further relief from the government of India, remains imperative for the telco’s long-term survival.

‘Further, with no relief so far on AGR dues (repayments commence March 2026) and no breakthrough on the debt raise, we believe Vi is likely to face an annual cash shortfall of ~₹200 bn (₹20,000 crore) and may be unable to meet its capex guidance of ₹500-550 bn (₹50,000-55,000 crore) over FY25-27E,’ the brokerage said.