Vodafone Idea Share Price In Focus As Citi Gives Verdict After Company Confirms AGR Relief — What's Next?

Shares of Vodafone Idea will be in focus once again on Monday's trade after Citi came out with a report on the cash-strapped telecom operator, which confirmed it has received relief to its AGR-linked dues on Friday.

In its latest note, Citi pointed out that the confirmation of the relief linked to AGR dues could materially improve the company's cash flow while fast-tracking its debt-raise plans.

The brokerage firm noted that the relief could indeed fast-track Vodafone Idea's potential Rs 25,000 crore bank debt raise, which could be essential in its bid to payoff spectrum dues.

This comes on the back of Friday's confirmation when Vodafone Idea confirmed it has received communication from the Department of Telecommunications (DoT) regarding the adjusted gross revenue-linked dues.

The cash-strapped telecom operator has confirmed receiving a relief from the DoT, freezing the AGR dues and outlining a staggered payment structure that extends through 2041.

Under the new terms, the company’s total liability is frozen, preventing the accumulation of further interest on these specific legacy dues, the company confirmed in an exchange filing.

As per the DoT directive, Vodafone Idea will follow a three-tiered repayment schedule designed to ease immediate cash flow pressures.

Citi believes Vodafone Idea bank debt raise plans could pave the way for another equity raise, as the cash-strapped telecom operator looks to pay off its debt and compete with its rivals.

The brokerage firm also notes that continued government support therefore, remains critical for Vodafone Idea, with limited AGR relief being a downside, in addition to competition intensity worsening over time.

Keeping these factors in mind, Citi has maintained a 'buy' rating on Vodafone Idea with an unchanged target price of Rs 15.