Retail investors slam Vodafone Idea over user wipeout, stock crash
Retail shareholders ofVodafone Idea Ltd (Vi) raised concerns on Friday over the company's continued loss of subscribers and its fragile financial health. During the extraordinary general meeting (EGM) convened to approve the ₹20,000 crore fundraise, shareholders questioned the management about the lack of upside in the share price and a significant fall, particularly in the aftermath of the follow-on public offer (FPO) last year.
The absence of Aditya Birla Group chairman Kumar Mangalam Birla from the meeting also drew concern, with a few shareholders expressing disappointment over his non-attendance. The government is the largest shareholder in Vodafone Idea with a 49% stake, followed by promoters—Vodafone Group at 16.07% and Aditya Birla Group at 9.5%. Retail investors own 14.96% of the company.
'Despite the previous fundraises, including the government conversion, there is no upside in the share price. In fact, the government's equity investment (via dues conversion) in the company has also gone into losses (at the current share price). If the management cannot handle the company, it should consider selling or surrendering it to the government," Santosh Kumar Saraf, a retail shareholder of the company, said during the meeting.
Also Read: Faster WiFi plan hits spectrum interference worry
Saraf wondered aloud what would happen if the company defaulted even after the fundraiser. Lately, the government has been exploring a resolution on the telecom operator's substantial dues. As of 31 March, Vodafone Idea's total government dues stood at around ₹2 trillion, including ₹1.19 trillion in spectrum dues and ₹83,400 crore adjusted gross revenue (AGR) dues.
Mounting expenses
In the absence of any relief from the government, starting 31 March 2026, Vodafone Idea will have to pay an annual instalment of over ₹18,000 crore for the next six years towards AGR and spectrum dues to the government. The dues are under moratorium, which will expire in September. In 2025-26 itself, Vodafone Idea will have to pay ₹16,428 crore towards AGR dues and ₹2,539 crore towards deferred spectrum dues.
Going by the company's share price performance, the Friday closing share price of ₹7.40 is over 38% lower than the FPO listing price of ₹12 in April last year. In fact, the government's investment in Vodafone Idea through two equity conversions at ₹10 a share has also fallen by 26% at the current share price. In August 2018, when Vodafone Group completed its merger with Idea, the company's share price was ₹30.
'The company needs to focus on increasing its business. Many small investors are stuck in the company for the last so many years," said Redeppa Gunduluru, another retail investor, who has expressed concerns over the losses he incurred recently and the volatile share price.
'Vi's continued subscriber losses and weaker data net adds remain key concerns. Despite potential acceleration in network investments, we believe regaining subscribers will remain a tall ask for Vi, given that peers—with superior free cash flow generation and deeper pockets—can keep customer acquisition costs higher," said analysts at Motilal Oswal in a note dated 2 June.
'Further, with no relief so far on AGR dues (repayments commence March 26) and no breakthrough on the debt raise, we believe Vi is likely to face an annual cash shortfall of ₹20,000 crore and may be unable to meet its capex guidance of ₹50,000-55,000 crore over FY25-27," the analysts said.
Narender Chauhan from Uttar Pradesh, another shareholder of the company, asked the management about the company's road map in the next 3-4 years, its plans for pan-India 5G coverage, and clarity on the satcom services launch after its recent collaboration with US-based AST SpaceMobile on direct-to-device connectivity.
Dodging queries
In an exchange filing on 30 May, Vodafone Idea said its board had approved raising another ₹20,000 crore through a follow-on public offering, private placement, or other permissible mode. The company said a capital raising committee will evaluate and decide on the potential route of fundraising. This fundraising approval comes at a time when the telecom operator is also looking to tie up ₹25,000 crore in bank debt to fund the capex for network expansion.
When shareholders asked about the use of the ₹20,000 crore proceeds, the company's chief financial officer Murthy G.V.A.S. said, 'The proceeds will be used for capital expenditure." The management, however, did not address the shareholders' queries about the company's survival and revival concerns and the way forward.
Also Read: Next-gen gadgets, WiFi speeds to get boost as India to open up new spectrum
Notably, since the merger, Vodafone Idea has raised total equity of around ₹56,000 crore, out of which around ₹27,000 crore has been contributed by the promoters, the company told the Supreme Court in a recent plea to seek waiver on AGR dues from the government. The plea, however, was rejected by the court.
In the petition, the telecom company had said it would not be able to operate beyond the current fiscal year without bank funding, which remains elusive as lenders remain wary of its dues worth ₹83,000 crore linked to AGR.
On the shareholder questions, Ravinder Takkar, the company's non-executive chairman, said, 'most of the questions were related to items outside the agenda items (of the EGM)." Takkar, however, asked the company to take note of some of the suggestions made by the shareholders.
Pinning its hopes
Vodafone Idea is set to incur capital expenditure of ₹5,000-6,000 crore for the first half of 2025-26 to enhance its network and infrastructure. However, its next leg of spending would be dependent on funds from banks, the company's CEO, Akshaya Moondra, had said in an earnings call on 2 June.
'I see no reason why the government should be constrained in any way to offer relief…," Moondra had said.
Vodafone Idea is the most widely held stock, with over 6 million retail shareholders (more than the State Bank of India), according to the company's letter to the department of telecommunications on 17 April seeking further support.
In May last year, Vodafone Idea said it would incur a capital expenditure of ₹50,000-55,000 crore over the next three years to expand its 4G network and launch its 5G service.
"Completion of ₹25,000 crore debt-raising is key for executing Vi's ₹50,000-55,000 crore capex programme. Higher government flexibility around AGR dues offers a ray of hope," IIFL Capital said in a note on 2 June.
Also Read: Will private 5G networks take off, finally?
The retail investors also questioned the company's management about the fall in subscriber base and whether there are any plans to merge with state-owned BSNL.
In an interview withMinton 23 April, Union communications minister Jyotiraditya Scindia said there are no plans to merge Vodafone Idea with BSNL. 'I do not think it is necessarily inefficient to have two competing businesses. There are multiple verticals where the government has competing businesses. Also, there was no physical cash outgo in this (Vodafone Idea) conversion. What the government has retained is an upside, no downside," Scindia had said.
As of 31 March, Vodafone Idea had 198.2 million mobile subscribers. Even as Vodafone Idea has been losing subscribers for a long time now, the company's subscriber churn rate has slowed down during the March quarter. Compared to the loss of 5 million subscribers each in the September and December quarters, its subscriber churn slowed down to 1.6 million in the fourth quarter.
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The dues are under moratorium, which will expire in September. In 2025-26 itself, Vodafone Idea will have to pay ₹16,428 crore towards AGR dues and ₹2,539 crore towards deferred spectrum dues. Going by the company's share price performance, the Friday closing share price of ₹7.40 is over 38% lower than the FPO listing price of ₹12 in April last year. In fact, the government's investment in Vodafone Idea through two equity conversions at ₹10 a share has also fallen by 26% at the current share price. In August 2018, when Vodafone Group completed its merger with Idea, the company's share price was ₹30. 'The company needs to focus on increasing its business. Many small investors are stuck in the company for the last so many years," said Redeppa Gunduluru, another retail investor, who has expressed concerns over the losses he incurred recently and the volatile share price. 'Vi's continued subscriber losses and weaker data net adds remain key concerns. Despite potential acceleration in network investments, we believe regaining subscribers will remain a tall ask for Vi, given that peers—with superior free cash flow generation and deeper pockets—can keep customer acquisition costs higher," said analysts at Motilal Oswal in a note dated 2 June. 'Further, with no relief so far on AGR dues (repayments commence March 26) and no breakthrough on the debt raise, we believe Vi is likely to face an annual cash shortfall of ₹20,000 crore and may be unable to meet its capex guidance of ₹50,000-55,000 crore over FY25-27," the analysts said. Narender Chauhan from Uttar Pradesh, another shareholder of the company, asked the management about the company's road map in the next 3-4 years, its plans for pan-India 5G coverage, and clarity on the satcom services launch after its recent collaboration with US-based AST SpaceMobile on direct-to-device connectivity. Dodging queries In an exchange filing on 30 May, Vodafone Idea said its board had approved raising another ₹20,000 crore through a follow-on public offering, private placement, or other permissible mode. The company said a capital raising committee will evaluate and decide on the potential route of fundraising. This fundraising approval comes at a time when the telecom operator is also looking to tie up ₹25,000 crore in bank debt to fund the capex for network expansion. When shareholders asked about the use of the ₹20,000 crore proceeds, the company's chief financial officer Murthy G.V.A.S. said, 'The proceeds will be used for capital expenditure." The management, however, did not address the shareholders' queries about the company's survival and revival concerns and the way forward. Also Read: Next-gen gadgets, WiFi speeds to get boost as India to open up new spectrum Notably, since the merger, Vodafone Idea has raised total equity of around ₹56,000 crore, out of which around ₹27,000 crore has been contributed by the promoters, the company told the Supreme Court in a recent plea to seek waiver on AGR dues from the government. The plea, however, was rejected by the court. In the petition, the telecom company had said it would not be able to operate beyond the current fiscal year without bank funding, which remains elusive as lenders remain wary of its dues worth ₹83,000 crore linked to AGR. On the shareholder questions, Ravinder Takkar, the company's non-executive chairman, said, 'most of the questions were related to items outside the agenda items (of the EGM)." Takkar, however, asked the company to take note of some of the suggestions made by the shareholders. Pinning its hopes Vodafone Idea is set to incur capital expenditure of ₹5,000-6,000 crore for the first half of 2025-26 to enhance its network and infrastructure. However, its next leg of spending would be dependent on funds from banks, the company's CEO, Akshaya Moondra, had said in an earnings call on 2 June. 'I see no reason why the government should be constrained in any way to offer relief…," Moondra had said. Vodafone Idea is the most widely held stock, with over 6 million retail shareholders (more than the State Bank of India), according to the company's letter to the department of telecommunications on 17 April seeking further support. In May last year, Vodafone Idea said it would incur a capital expenditure of ₹50,000-55,000 crore over the next three years to expand its 4G network and launch its 5G service. "Completion of ₹25,000 crore debt-raising is key for executing Vi's ₹50,000-55,000 crore capex programme. Higher government flexibility around AGR dues offers a ray of hope," IIFL Capital said in a note on 2 June. Also Read: Will private 5G networks take off, finally? The retail investors also questioned the company's management about the fall in subscriber base and whether there are any plans to merge with state-owned BSNL. In an interview withMinton 23 April, Union communications minister Jyotiraditya Scindia said there are no plans to merge Vodafone Idea with BSNL. 'I do not think it is necessarily inefficient to have two competing businesses. There are multiple verticals where the government has competing businesses. Also, there was no physical cash outgo in this (Vodafone Idea) conversion. What the government has retained is an upside, no downside," Scindia had said. As of 31 March, Vodafone Idea had 198.2 million mobile subscribers. Even as Vodafone Idea has been losing subscribers for a long time now, the company's subscriber churn rate has slowed down during the March quarter. Compared to the loss of 5 million subscribers each in the September and December quarters, its subscriber churn slowed down to 1.6 million in the fourth quarter.
