Brokerage firm CLSA has retained its ‘Hold' rating on Vodafone Idea, with a target price of Rs 13 per share, as it flagged the telecom operator's sizeable spectrum liabilities and the sharp increase in government repayments from FY29.
According to CLSA, Vodafone Idea has planned to raise around Rs 350 billion ($3.7 billion) in bank debt to support its targeted Rs 450 billion ($4.7 billion) network investments over FY27-FY29. However, the brokerage said investors need to look beyond the proposed debt raise, given the company's substantial spectrum repayment obligations.
Vodafone Idea's estimated spectrum debt stands at around Rs 1.3 trillion ($13.7 billion). While repayments to the government are relatively manageable at Rs 67-167 billion annually in FY27 and FY28, these obligations are expected to rise sharply to around Rs 270 billion ($2.8 billion) annually from FY29, CLSA said.
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The brokerage noted that a further conversion of spectrum dues into equity by the government remains a possibility. However, it expects such a move to become more likely only if the government's ownership falls below 49%.
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CLSA also highlighted Vodafone Idea's subscriber trends as a key concern. While the company's overall subscriber base increased by 0.8 million between January and August 2026 to 199.6 million, TRAI data excluding M2M subscribers shows a loss of 3.2 million mobile subscribers, taking the mobile subscriber base to around 177 million.
Vodafone Idea has around 22.6 million M2M subscribers, which have significantly lower average revenue per user (ARPU), the brokerage said. Vodafone Idea's mobile ARPU of Rs 177 currently trails Bharti Airtel by around 26-33%. Its revenue market share also declined 32 basis points year-on-year to 12.9% in Q1 FY27, according to CLSA.
The brokerage also pointed to delays in the company's planned network investment. Vodafone Idea's Q1 FY27 capex stood at Rs 19.3 billion, down 21% YoY. Since its Rs 201 billion equity raise in April 2024, the company has expanded its sites by 150,000 and broadband towers by 34,000, but CLSA said these additions still lag Bharti Airtel by around 40-50%.
With network investment, subscriber trends and the sizeable spectrum repayment burden remaining key factors, CLSA has maintained its Hold stance on Vodafone Idea with a target price of Rs 13.
On Wednesday, Vodafone Idea share price ended 4.22% lower at Rs 12.95 apiece on the BSE.
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