*VODAFONE IDEA* (Vi) - TURNAROUND ANALYSIS 👉Current Financial Position (FY25 Results) 👉Recent Performance Highlights: - **Revenue Growth**: Total revenue for FY25 grew by 2.2%, rising from Rs 42,650 crore in FY24 to Rs 43,570 crore - **EBITDA Improvement**: Annual cash EBITDA (excluding lease accounting changes) went up by 9.5%, increasing from Rs 8,400 crore to Rs 9,200 crore, marking the third consecutive year of improvement - **ARPU Growth**: ARPU rises to Rs 164 in Q4FY25, showing consistent pricing power - **Loss Reduction**: Net loss narrows to Rs 7,166 crore in Q4FY25 👉Subscriber Base: - As of 30 September 2024, Vi has a subscriber base of 212.45 million, making it third largest mobile telecommunications network in India - 4G subscriber base reached 126.4 million, while broadband site count grew to ~494,600 👉Debt Challenge - The Elephant in the Room 👉Massive Debt Burden: - Even after government relief measures, Vodafone Idea's debt stood at Rs 2.2 lakh crore - Total deferred payment obligations of ₹2.02 trillion at the end of Q3 FY25 - Vi warns of insolvency risk beyond FY26 without government support 👉Debt Reduction Progress: - Vi was able to reduce its debt from banks, bringing it down from Rs 4,040 crore in March 2024 to Rs 2,330 crore in March 2025 - Ministry of Communications decided to convert some outstanding spectrum auction dues worth Rs 36,950 crore payable between 2025–26 and 2027–28 into equity shares 👉Turnaround Catalysts ✅1. **5G Rollout Strategy** - Launched 5G services in Mumbai, Delhi, Chandigarh, and Patna, with plans to expand to all 17 circles with 5G spectrum by August 2025 - Targeting 75 cities with affordable plans, AI-driven networks, and ₹30,000 crore in upgrades ✅2. **Infrastructure Investments** - Total capex reached Rs 9,570 crore for FY25 - Deployed ~13,700 Massive MIMO sites, ~14,900 additional sites ✅3. **Government Support** - Spectrum dues conversion to equity - AGR payment moratorium - Policy framework supportive of telecom sector consolidation ✅ 4. **Fundraising Plans** - Board approves Rs 20,000 crore fundraise via FPO or private placement Investment Thesis - Pros & Cons 🟢 **PROS:** 1. **Operational Improvements**: Consistent EBITDA growth and ARPU increases 2. **Market Position**: Third-largest telecom operator with significant subscriber base 3. **5G Opportunity**: Early mover advantage in affordable 5G services 4. **Government Backing**: Implicit government support to prevent duopoly 5. **Tariff Hikes**: Industry-wide tariff increases benefiting all players 6. **Asset Base**: Significant spectrum holdings and tower infrastructure 🔴 **CONS:** 1. **Debt Overhang**: Massive debt burden of Rs 2.2 lakh crore 2. **Survival Risk**: Company warns of insolvency beyond FY26 3. **Cash Flow Negative**: Still burning cash despite operational improvements 4. **Subscriber Churn**: Gradual erosion of subscriber base 5. **Execution Risk**: Delays in fundraising and 5G rollout 6. **Dilution Risk**: Massive equity dilution from debt conversion and fundraising 👉Turnaround Probability Assessment 👉 **High Risk, High Reward Scenario:** - **Success Case**: If Vi successfully raises Rs 20,000+ crore and executes 5G rollout, it could become a strong #3 player in a consolidated market - **Failure Case**: Insolvency and potential liquidation if funding doesn't materialize ✅ **Key Milestones to Watch:** 1. **Q1 FY26**: Successful completion of Rs 20,000 crore fundraising 2. **August 2025**: 5G rollout completion across all circles 3. **FY26**: Achievement of positive free cash flow 4. **Government Policy**: Further relief measures or support 👉Investment Recommendation **SPECULATIVE BUY with HIGH RISK TOLERANCE ONLY** Vi represents a classic turnaround bet with: - **Upside**: 10x+ returns if successful turnaround - **Downside**: 100% loss if company fails **Suitable for**: Investors with high risk appetite who can afford total loss and believe in government support for preventing telecom duopoly. **Not suitable for**: Conservative investors or those seeking stable returns. **Position Sizing**: Maximum 2-3% of portfolio due to binary outcome nature. The company is at a critical juncture - it's either going to emerge as a strong player in India's telecom duopoly/triopoly or face insolvency. The next 12-18 months will be decisive for Vi's survival and turnaround story. ✍️ Dr. *Tohid Alam Khan* *NISM CERTIFIED RA* Founder of *SHAREALAM* 12+ Years of Experience in Stock Market