Citi, in its latest note on Vodafone Idea, mentioned about the government’s ₹3,700 crore spectrum dues-to-equity conversion, which has resulted in a 49% government stake in the company.
Additionally, credit rating agency ICRA has upgraded Vodafone Idea to investment grade (BBB-), a move that supports the company’s bank debt raising efforts.
Citi remains positive on both Vodafone Idea and Indus Towers.
In an investor presentation on April 9, Vodafone Idea said that price increases and subscriber additions will be key drivers of revenue growth.
Given inflationary pressures, prices need to catch up, the debt-ridden telecom service provider said in a filing.
There is significant headroom for ARPU (Average Revenue Per User) growth, as usage has increased multifold, but ARPU has not kept pace. The company added that customers’ ability to pay higher tariffs is already established.
Further price increases are necessary to generate reasonable returns and support future investments.
The telco’s focus going forward will be on driving ARPU improvement and retaining customers.
Vodafone Idea has also announced a capex plan of ₹50,000–55,000 crore over the next three years.
Of the 21 analysts that track Vodafone Idea, 11 of them have a ‘Sell’ rating on the counter, while five analysts each have a ‘Buy’ and ‘Sell’ recommendation.
Among the 24 analysts that have coverage Indus Towers, 13 of them have a ‘Buy’ rating on the stock, six of them have a ‘Hold’ rating, while five have a ‘Sell’ rating.
On Friday, shares of Vodafone Idea Ltd. settled 1.13% higher at ₹7.18, while those of Indus Towers climbed 0.86% higher at ₹373.40.
