According to a recent research note by Emkay, Vodafone Idea Limited (Vi) is likely to face a funding shortfall of around Rs 250 billion in fiscal year 2026 (FY26) and Rs 360 billion in FY27, thus requiring a steep tariff hike of 85 per cent and 122 per cent, respectively, to meet such a shortfall.

As per Emkay, the conversion of instalments into equity by the government will still leave a shortfall of Rs 135 billion in FY26 and Rs 190 billion in FY27, requiring tariff hikes of 45 per cent and 64 per cent, respectively, and lead to huge dilution for Vi’s minority shareholders. It added that the cash crunch for the telco is limited its ability to fund capex, which is worsening its position in the market. Analysis by Emkay showed that Bharti Airtel and Reliance Jio capturing 40 per cent each of Vi’s revenue with 60 per cent probability of a duopoly will translate into option value of Rs 90 per share of Airtel and Rs 80 per share for Jio.

The brokerage firm added that Vi’s net debt remained elevated at Rs 2.23 trillion at the end of Q3 FY23. This includes deferred spectrum payment obligations of Rs 1.39 billion and adjusted gross revenue (AGR) liability of Rs 699 billion. Vi’s first payment towards the spectrum dues will start from October 2025 and for AGR dues from March 2026, post moratorium on payments. At the end of the moratorium in FY27, Vi will be required to make a payment of Rs 91 billion per annum as regular instalment towards AGR dues and Rs 74 billion per annum of instalments arising from the deferment. For spectrum dues, Vi will be required to make a payment of Rs 148 billion per annum pertaining to regular instalment and of Rs 100 billion per annum for the new instalment stream arising from the deferment. Overall, Vi will need to make a payment of Rs 413 billion per annum at the end of the moratorium. Including spectrum instalment for 5G, total yearly payment comes to Rs 431 billion from FY27.

Further, according to Emkay, with Jio and Airtel intending to garner overall market share, Vi may see collateral damage with the need for a steep tariff hike of 85 per cent and 122 per cent by FY26 and FY27 respectively to meet its cash shortfall. There is an increasing risk of a duopoly.