Vodafone Idea (Vi) is aiming to become 5G-ready by the end of the next financial year (FY26) and intends to expand its customer base through upselling premium plans, as per insights from Nuvama Institutional Equities following a meeting with the telecom company’s leadership. While Vi is progressing towards stability, it remains cautiously optimistic about its future.
According to Nuvama, Vi’s management sees tariff hikes as essential for the industry’s sustainability. They anticipate all three major players to participate in tariff increases, similar to previous instances like those in December 2019 and December 2021. Vi plans to further enhance its average revenue per unit (ARPU) by transitioning more subscribers from 2G to 4G. Currently, 42 percent of Vi’s subscribers use 2G, compared to 28 percent for Airtel.
The telecom provider aims to complete initial capital expenditure related to tower and device infrastructure within six to eight quarters, with overall capital expenditure spread over the next three years. Nuvama suggests that Vi is making progress toward becoming a “going concern,” although challenges remain.
Citi research indicates optimism for Vi’s future, citing the success of its recent Rs 18,000 crore follow-on public offer (FPO). This has led to a revision of earnings forecasts, assuming a 60 percent increase in ARPU to Rs 230 by FY28, supported by 15 percent 4G tariff hikes in the second quarter of FY25 and third quarter of FY26.
However, analysts remain cautious about Vi’s turnaround, emphasizing the need for tariff hikes, halting subscriber decline, and ideally, debt relief. While some analysts have shifted their recommendation for Vi’s stock from ‘sell’ to ‘hold,’ they stress that several factors must align for Vi’s recovery.
