Vodafone Idea unveils ₹45k-cr revival plan; analysts cautious on execution

Telecom major Vodafone Idea (Vi) has once again put its revival story on the table, this time with a detailed three-year blueprint that hinges on aggressive network investment, steadier subscriber trends and a friendlier regulatory backdrop. Brokerages broadly agree on one thing that the plan is necessary. Whether it is achievable remains the open question.

 

After years of firefighting around adjusted gross revenue (AGR) dues and spectrum liabilities, the telco believes the worst of its balance-sheet stress is behind it. With the AGR matter largely resolved, management has unveiled an ambitious roadmap aimed at restoring competitiveness against larger peers Reliance Jio and Bharti Airtel. The centrepiece is a ₹45,000 crore capital expenditure (capex) push over FY26-FY29, coupled with marketing muscle to arrest subscriber losses and drive double-digit revenue growth.

 

Yet, despite acknowledging the logic of the strategy, analysts remain cautious, flagging execution risks, funding dependencies and the sheer scale of the growth assumptions baked into the plan.

A capital-heavy reset

 

At the middle of Vodafone Idea’s turnaround pitch is network parity. The company plans to deploy ₹45,000 crore over the next three years to expand 4G coverage across 17 priority circles and roll out 5G in key urban markets. Roughly 70 per cent of this spend is expected to go into radio and tower additions. From Indus Towers’ perspective, Vodafone Idea aims to add 40,000-45,000 unique towers over the next two years, after adding nearly 20,000 in the past 18 months.

 

The investment, management argues, should translate into sustained subscriber additions, improved average revenue per user (ARPU), and a sharp jump in operating profitability. The company is targeting double-digit revenue growth and a near threefold rise in cash Ebitda to about ₹30,000 crore by FY29.

 

ICICI Securities describes the roadmap as “ambitious but critical”, noting that the implied revenue compound annual growth rate of 17.5 per cent over FY26-FY29 is about 1.5 times expected industry growth. That, in turn, assumes not just better networks but also continued tariff hikes and a stabilisation in subscriber churn.  ALSO READ | Analysts raise TVS Motor target price as margins surprise, growth firms up

Brokerages back the vision, doubt the maths

 

While most analysts accept that Vodafone Idea needs to spend heavily to stay relevant, few are willing to fully buy into management’s projections.

 

Motilal Oswal, for instance, calls the goals “lofty” and cautions that the road to revival is long and uneven. In its view, the turnaround hinges on several variables, including successful closure of debt funding, further tariff hikes, stable subscriber trends, rational competition and a benign regulatory regime – many of which lie outside management’s control. If Vodafone Idea begins to emerge as a credible third player, competitive intensity from peers could increase, potentially undermining ARPU gains.

 

The brokerage believes that even retaining current market share will be a tall order, given peers’ superior free cash flow generation and product offerings. While Motilal has marginally raised its FY27-FY28 revenue estimates on expectations of higher ARPU, it still pegs Ebitda well below management’s ambitions and reiterates a neutral stance.

 

“We reiterate our Neutral rating on Vi with a revised TP of ₹10 (earlier ₹11), based on DCF implied ~13x FY28E EV/Ebitda, implies ~21.5x FY28E pre-IND AS Ebitda, which is at a considerable premium to Vi’s larger peers,” Motilal Oswal analysts said. 

 

ICICI Securities has trimmed its FY26-FY27 Ebitda estimates by 10-15 per cent, reflecting concerns around execution and funding. However, it has retained its target price of ₹10 by assigning a slightly higher EV/Ebitda multiple and adjusting net debt for AGR relief, underscoring a wait-and-watch approach. The brokerage has retained its ‘Hold’ rating to the Vodafone Idea stock.  ALSO READ | Garden Reach shares advance 5% after Q3 results; earnings breakdown here

Early signs, lingering stress

 

Operationally, recent numbers offer a mixed picture. In the December quarter, Vodafone Idea reported modest revenue growth and better-than-expected ARPU, aided by upgrades and an improved subscriber mix. Ebitda edged ahead of estimates, supported by incremental gains in 4G and 5G subscribers.

 

However, the company continued to lose overall subscribers, and net debt climbed to over ₹2 trillion by the end of the quarter, as the impact of AGR relief is yet to fully reflect in reported numbers. Capex intensity has also picked up, signalling that the heavy spending phase is already under way.

 

JM Financial strikes a relatively more constructive tone, maintaining an ‘Add’ rating with a target price of ₹11. It sees merit in the scale of the planned investment and acknowledges early improvements in ARPU and data subscribers. Still, even this optimism is tempered by recognition of balance-sheet stress and the dependence on timely execution.  ALSO READ | L&T Q3 results spark optimism; analysts retain 'buy', raise target prices

The long test ahead

 

In many ways, Vodafone Idea’s latest plan is less about optimism and more about necessity. Without a significant network upgrade, the company risks sliding further behind. But the blueprint demands near-flawless execution, steady regulatory support and a market environment that does not turn sharply more competitive.

 

For now, brokerages are willing to give the strategy a hearing, not a free pass. The coming quarters will determine whether this ambitious reset marks the beginning of a credible revival, or simply another chapter in a long and uncertain turnaround story.   

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