Tue Sep 24 07:11:53 UTC 2024: ## Vodafone Idea Remains Hopeful for AGR Resolution Despite Supreme Court Setback

**Mumbai, India** – Vodafone Idea (VIL) continues to pursue a resolution to the Adjusted Gross Revenue (AGR) dues calculation, despite the Supreme Court’s recent rejection of a curative petition on the matter. According to ICICI Securities, VIL maintains that its case has strong merit and is engaging in encouraging dialogue with the government.

While VIL has not incorporated an AGR resolution into its business plan, they are factoring in a government debt conversion of Rs 29,000 crore into equity at the end of the moratorium period. This would be part of the government’s telecom reform package.

ICICI Securities, however, has pushed back its AGR relief estimate from FY25 to FY26 and capex acceleration to FY26. This has resulted in revised net profit estimates for FY25–27E, while Ebitda remains unchanged.

Despite the potential for an AGR resolution, ICICI Securities has lowered its EV/Ebitda multiple to 13 times FY27 from 14 times and reduced its target price to Rs 11 from Rs 15, maintaining a ‘Hold’ rating on the stock. MOFSL also holds a ‘Neutral’ rating on VIL with a target price of Rs 12.

VIL is nearing the completion of debt funding of Rs 25,000 crore, with another Rs 10,000 crore for non-fund facilities. This will help boost capex, which is expected to kickstart from November 2024. VIL has also signed deals with major equipment suppliers for Rs 30,000 crore, including radios to be supplied over the next three years.

The telecom operator anticipates another tariff hike of 15–20 per cent in 15 months, according to ICICI Securities.

MOFSL highlights that the significant amount of cash needed to service debt limits upside opportunities for equity holders, despite the potential for ARPU improvement. The brokerage expects the conversion of unpaid installments into equity post-moratorium to begin by FY26/FY27.

Both ICICI Securities and MOFSL foresee a revenue/Ebitda CAGR of 11 per cent/31 per cent over FY24-26E.

While VIL remains optimistic about finding a solution to the AGR issue, the stock’s future performance will hinge on the outcome of these ongoing negotiations and the company’s ability to manage its debt burden while investing in network upgrades and improving its subscriber base.

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