Vodafone Idea ’s shares plunged by over 10% on August 3, a day after Kumar Mangalam Birla offered to give up his 27% stake in the telco.- In the last one month, the Vodafone Idea stock has lost a fifth of its value.
- Analysts at Goldman Sachs estimate a further decline of 60% in Vodafone Idea’s share price.
In the last one month, Vodafone Idea’s share price has lost a fifth of its value. Half of that fall is from today. As of 11:50 a.m., Vodafone Idea’s shares are down by over 10%, trading at ₹7.38 a share.
Things are so dire for the telco that its Indian promoter, Kumar Mangalam Birla, has $4 to give up his 27% stake in the company to any entity that wants to keep running Vodafone Idea.
With one of the lead promoters ready to throw in the towel, it is understandable that investors are running away from the stock.
Analysts are not optimistic about the company’s prospects, either.
In a report dated July 29, Goldman Sachs maintained its ‘Sell’ rating for Vodafone Idea, with the target price set at ₹3 per share, suggesting that there is a further likelihood of a 60% decline in the telco’s share price.
Vodafone Idea’s first installment towards repayment of the ₹50,000 crore adjusted gross revenue dues also begins in December this year, which means that the telco is staring at an immediate liability of ₹5,000 crore. The company’s entire market value is a little over ₹21,000 crore now.
“It is well-flagged that Vodafone Idea has large repayments due starting Dec ‘21, and its balance sheet is stressed,” the report adds.
The AGR installments, combined with deferred spectrum dues of ₹8,292 crore means the company needs funds right now and $4.
“If Vodafone Idea is unable to repair its balance sheet quickly, we see an accelerated erosion in the company’s market share,” the report explains.
Nothing describes Vodafone Idea’s downward spiral better than the rate at which it has been losing subscribers. Since the beginning of 2020, the telco has lost over 51 million subscribers.
In comparison, Jio has added nearly 62 million new subscribers, while Airtel has added over 21 million.
To make matters worse, Vodafone is losing the relatively lucrative 4G subscribers, too – in May, for each 2G/3G subscriber it lost, three 4G subscribers also ported out from the operator.
A Jefferies report dated July 29 suggests that the decline in Vodafone Idea’s subscribers during the second wave of Covid is similar to the first wave.
Overall, since the beginning of 2020, Vodafone Idea has lost 5.1 percentage points when it comes to active subscribers market share. In January 2020, its market share stood at 30.1%, which is now at 25%.
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