According to IIFL Securities, there is a strong possibility of the government owning over 70 per cent ownership of Vodafone Idea Limited (Vi) by converting the telco’s principal statutory dues into equity after the payment moratorium ends in Q3 FY26. This could limit equity funding from third parties. Vi faces over Rs 400 billion in annual regulatory payouts from FY26 onwards after the four-year moratorium is lifted.
The brokerage firm said in a note that significant external equity infusion may be unlikely considering the potential significant dilution once the moratorium is lifted. It added that if the government exercises its option of converting the principal into equity, Vi could end up with over 70 per cent government ownership.
As per IIFL Securities, Vi’s near-term cash flow squeeze may also weigh on payments to Indus Towers Limited, resulting in high doubtful debt provision for the towerco in Q2 FY24.
