Vodafone Idea Limited (VIL) raised the level of capex (capital expenditure) in FY25 by several times compared to the last few years. This was a planned move to get its network at par with where Airtel and Jio and stand. It includes both 4G expansion and improvement and 5G deployment. However, Motilal Oswal, a research firm, doesn't believe that it will be enough for the telco to add new consumers. The capex will definitely improve the network presence and the quality of services for Vi. However, that won't be enough in helping to add new users.
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Despite the heavy investments in FY25, according to Motilal Oswal, Vi lost 130 basis points in subscriber market share (SMS) and 155 basis points in revenue market share (RMS) in FY25. Airtel and Jio are growing continously at the cost of Vodafone Idea. The elevated subscriber churn compared to the competitors and a lower ARPU translation has put the company in a place where it is losing users to the competiton.
The competitors have a better free cash flow, and thus, it will be hard for Vi to compete with them in the area of subscriber addition, despite incurring high capex. Vodafone Idea board recently approved a fundraise of Rs 20,000 crore via equity and debt. This money will be crucial for continuing with the high capex and improve networks fast. The revenues will go towards paying off liabilities. One of the bottlenecks to Vi's growth is the adjusted gross revenue (AGR) dues payments that need to be made.
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The Indian government has said that it can't help Vi anymore in the AGR department. The Supreme Court has also said that it won't entertain any pleas around AGR dues.
