@vishesh.v wrote:
Isn’t it quite obvious Vodafone Idea will survive regardless of the AGR verdict?
Bharti Airtel was able to raise 21K crores which gave it a cushion to make AGR payments. Vodafone isn’t as investor friendly so may be it’s already working out some backup plan in case the SC verdict is against 20 years staggered payment (which is highly unlikely given that the government is itself batting for it). AGR worries may be overblown anyway, creating a smokescreen to buying the stock. Here’s why:
Only 3-4% of the customers use wireline broadband services, whereas the rest are on wireless, of which Vodafone has a market share of 30%. As per emerging trends, work from home and stay at home are a new normal (for an unseeable future) which is resulting in extremely high data usage (as per recent news Rs. 1367 crores was paid by Voda as licence fee and SUC charges which means roughly Rs. 15K crores of revs for 4Q20, 35% higher than Q3, could be a little off on these calculations but just writing what I know). This is just the beginning of the data usage boom, in 1Q21 many others (schools, other institutions etc.) have joined the bandwagon (of online teaching etc.), leading to even higher data usage.
Now regardless of how much cash balance Vodafone has, it’s business prospects have turned extremely favourable, which should enable it to raise money in case the promoters decide not to infuse more capital and in case it is needed.
Reliance will also be under pressure to capitalise on it’s Jio investment and will refrain from engaging in further price wars as it’s financial position will be relatively worse due to COVID (Retail and other businesses will suffer). To the contrary it might raise prices and government wouldn’t mind as ARPUs are already quite low and telecom is one of the only sectors adding some money to it’s kitty.
In conclusion, there’s a very high possibility that in a base case scenario Vodafone Idea shall continue as a going concern which gives it an asymmetric risk reward profile.
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