Fri Sep 20 12:16:24 UTC 2024: ## Vodafone Idea Faces Financial Crisis After Supreme Court Ruling

**Mumbai, India (September 20, 2024)** – Vodafone Idea (Vi) shares plunged on Friday after the Supreme Court dismissed petitions filed by telecommunication companies seeking correction of alleged errors in the adjusted gross revenue (AGR). The decision has raised serious concerns about Vi’s financial stability, potentially leading to a financial crisis in the second half of 2025.

Vi shares hit a 52-week low of ₹9.79 on Friday, closing at ₹10.48 on the BSE, despite a slight recovery later in the day. The stock has shown a declining trend since the court ruling, highlighting investor anxieties about Vi’s future.

Analysts predict that Vi will face a major financial burden in the coming years as it is obligated to pay annual spectrum and AGR payments to the government of $4-5 billion. Without any concessions on AGR, Vi would need 25-30 years to organically pay back its obligations, according to Macquarie research.

“Given Vi’s still-unresolved fundamental balance sheet and cash flow challenges, our base case with 50 per cent probability remains a ‘VI chug-along scenario’ with steady market-share erosion to Jio and Bharti,” said the Macquarie research report.

Further exacerbating the situation, concerns are emerging about Vi’s ability to retain subscribers and drive ARPU (average revenue per user) growth. Nuvama analysts noted that it would be difficult for Vi to maintain its subscriber base, impacting ARPU growth and, in turn, hurting cash flows.

While Vi recently hiked tariffs, it appears to be losing market share to BSNL, adding to its financial woes.

Experts have emphasized the need for Vi to significantly increase ARPU to ₹370 by FY27 to meet its annual payment obligations, assuming a 70% incremental EBITDA margin and 210 million subscribers.

The Supreme Court’s decision has dealt a major blow to Vi’s financial stability. Unless the company can secure significant concessions from the government or find alternative funding solutions, it faces a challenging future, with potential market share erosion and equity dilution posing significant risks.

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