Vi's ₹45,000 crore capex insufficient to regain market share, says HSBC

HSBC says Vodafone Idea's Rs 45,000 crore capex plan will not help it gain market share as Jio and Airtel outspend it significantly; tariff hikes and cash flow gains remain critical

Vodafone Idea’s planned Rs 45,000 crore capex over the next three to four years will not be enough to gain market share or make a dent in competition, as its capex pales in comparison to expected capex of Rs 1.2 to Rs 1.4 trillion ($14-16 bn) by 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, but 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 Rs 1.3 to 1.7 trillion ($15-20 bn) over FY21 to FY25, compared to Vi’s capex of Rs 22,500 crore in the same period.

 

Vi will need its operating cash flow to rise by three times in three years to meet its spectrum payment obligations, which start from Rs 7,000 crore in FY27, going to Rs 15,300 crore in FY28 and Rs 27,000 crore in FY29. This is despite the 10-year breather it has received from the government on payment terms of 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 the 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 Q2 FY27 for 4G and 5G subscribers, which would lead to mobile average revenue per user rising by 13-15 per cent on-year for the three operators in FY27.