₹45K cr capex plan may not help Vodafone Idea gain market share: Analysts

Amount much lower than rivals' capex: Analysts

Vodafone Idea’s (Vi's) planned ₹45,000-crore capital expenditure (capex) over the next three-four years will not be enough to gain market share or dent competition. This is because its capex is much lower in comparison to the expected capex of ₹1.2-₹1.4 trillion ($14-16 billion) of rivals Reliance Jio and Bharti Airtel, said analysts at HSBC Global Investment Research.

 

“We don’t think Vi’s planned network investment is sufficient for the company to improve its market share. It would help VI to stem its subscriber loss and we expect Vi’s subs market share to stabilise at about 16 per cent over FY26-28,” analysts said in a note on Monday.

 

Jio and Airtel have outweighed VI in terms of capex in the past years as well. The top two carriers have put in network investments of ₹1.3-1.7 trillion ($15-20 billion) over FY21 to FY25, compared to VI’s capex of ₹22,500 crore in the same period.

 

VI will need its operating cash flow to rise threefold in three years to meet its spectrum payment obligations. These payments start from ₹7,000 crore in FY27, going to ₹15,300 crore in FY28 and ₹27,000 crore in FY29.

 

This is despite the 10-year breather it has received from the government on payment terms for its outstanding adjusted gross revenue (AGR) dues.

 

“Additionally, Vi would also have spectrum renewals starting from 2030 which would entail additional capital investment. Thus, we think VI remains strategically aligned with other industry players to improve data monetisation and raise tariffs,” HSBC said in the report.

 

The brokerage forecasts a 15 per cent mobile tariff hike by September 2026 or Q2FY27 for 4G and 5G subscribers. This would lead to mobile average revenue per user (ARPU) rising by 13-15 per cent year-on-year for the three operators in FY27.