Q3FY24 Review: Vodafone Idea: Near-term liquidity needs ease; capex squeeze

31 Jan 2024 , 11:49 AM

Vodafone Idea (Vi)’s Q3 performance was similar to recent quarters – steady revenue and EBITDA while capex stayed subdued. Favorable telecom court verdict not only boosted reported PAT by ₹7.6 Billion, but more importantly will also result in cash flow relief for Vi as DoT offsets this against licence fee payable. ₹54 Billion debt maturing in the next 12 months, though substantial, implies lower near-term obligations. While this is positive for Indus Towers’ receivables position, Vi’s capex is likely to be remain subdued unless there is a significant fund-raise. Analysts at IIFL Capital Services have marginally tweaked their estimates.

Key takeaways from the earnings call: 

• Most of the benefits from entry-level pack price hikes in 16 circles are reflected in Q3 numbers
• Capacity augmentation has been largely led by spectrum re-farming
• Payment obligations to banks and financial institutions are lower in the next 12 months (though there is a higher concentration of payments in Q4 FY24) but vendor payments will take precedence over capex
• Promoter support of up to ₹20 Billion is available and can be tapped if required for meeting payment obligations
• The ₹7.6 Billion potential cash inflow from DoT on favorable court verdict will be set off against Vi’s LF dues.