Vodafone Idea's (Vi) shares fell 2.13% on Wednesday's early trade session. At the time of writing this, the telco's shares are trading at Rs 6.90, a negative of 2.13% from the previous close of Rs 7.05. It is a 52-week low for Vodafone Idea's shares. The telco is not able to raise funds and move ahead with its business plans. For days now, Vi's shares have been trading around the Rs 7 mark. But on Wednesday, the shares touched a 52-week low, meaning more hurt for the telco.
Vodafone Idea has been waiting for the Indian government to convert its dues to equity for more than a year now. The government's stance is that until Vi's promoters don't infuse meaningful capital into the company, it won't go ahead with the equity conversion. Vi's plans to roll out 5G are also stuck as the telco has no money to place commercial orders.
Vodafone Idea Likely to Use Fresh Funds to Service Old Debt
Most of what Vi will make will go towards clearing debt and dues to lenders and vendors. This is because if Vi defaults on payments, then it can be dragged to bankruptcy court. This is one of the major concerns for lenders to issue fresh loans. The fresh loans would just be used to service the old loans, and the ball would not move forward at all.
Vi needs its promoters to come through as fast as possible. Vodafone UK, the largest promoter in Vi, is reportedly looking to sell its remaining equity stake in Indus Towers and use the proceeds to help Vi. Bharti Airtel has said that it would let go of the right of first refusal if Vodafone wants to sell a stake in Indus Towers to infuse the proceeds in Vi.
What is Vi Doing for Customers?
Vodafone Idea's subscriber churn rate has been pretty high for the preceding quarter, and the telco's average revenue per user (ARPU) per month figure is also super low compared to its competitors. For retail customers, the telco is trying to improve the network speed experience with 4G. Just a couple of days back, Vi said that its 4G networks deliver 2x speed for customers in Andhra Pradesh & Telangana after boosting the capacity by deploying additional spectrum.
Vi has claimed the same thing for customers in other circles in the past. But the telco has not been able to really show what it has gained by improving speeds for the customers. For Vi, arresting the subscriber churn rate and increasing ARPU should be the two areas of focus.