The enormous gap between Vodafone Idea on one hand, Airtel and Jio on the other

• Airtel has six times more cash than Vodafone Idea.
• Both Reliance Jio and Airtel have nearly 1.5 times more subscribers than Vodafone Idea
• Vodafone Idea has more spectrum compared to Jio but still gets the least amount of traffic.
• The only thing it has more than others is debt. At the end of March, 2021, Vodafone Idea’s debt stood at ₹1.75 lakh crore, while Airtel’s debt stood at ₹1.53 lakh crore.

Vodafone Idea’s situation continues to worsen, in terms of market share, revenue as well as the value of the company. On the other hand, its rivals, Bharti Airtel and Reliance Jio (owned by the country’s richest man Mukesh Ambani) continue to get stronger, often at the cost of Vodafone Idea.

People are questioning the possibility of its survival. Even if it does get bailed out one way or another, the company will have a lot of catching up to do with its larger peers like Sunil Mittal’s Airtel and Ambani’s Reliance Jio. The loss of competitive muscle will only get worse the longer it remains in the current limbo.

No wonder its Indian promoter Kumar Mangalam Birla wants to give up his stake in the company, and his British partner Vodafone is not willing to sink any more money into this joint venture in India. Birla has also resigned as the non-executive director and chairman of the board of Vodafone Idea, a request which has been accepted by the company.

Not surprisingly, the stock took a tumble.

Airtel has six times more cash than Vodafone Idea

As of March 31, 2021, Vodafone Idea had ₹2,216 crore in the form of cash and bank balances. This is six times lower than Airtel’s reported cash and bank balance in the same period.

The only thing that Vodafone has more of, than Airtel and Jio, is debt

The cash crunch will only get worse when it has to pay up the dues ordered by the Supreme court, amounting to ₹58,631 crore. Of this, ₹5,034 crore falls due in December 2021 – an amount that the telco doesn’t seem to be in a position to pay.

In comparison, Airtel’s balance AGR liability stands at ₹25,976 crore, which means its current liability comes to ₹2,598 crore.


At the end of March, 2021, Vodafone Idea’s debt stood at ₹1.75 lakh crore, while Airtel’s debt stood at ₹1.53 lakh crore.

Vodafone is losing both subscribers and revenue at a fast pace

Since the beginning of 2020, Vodafone Idea has lost over 51 million subscribers. In the same period, Airtel and Reliance Jio have gained over 21 million and 62 million subscribers, respectively.

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 ported out from the operator.


The average revenue that Vodafone Idea makes from each of its users is also under pressure. According to the company’s latest statements, the average revenue per user stood at ₹107 at the end of March, 2021, down from ₹121 three months prior.

For comparison, Airtel’s ARPU in the same period was ₹145, while Jio stood at ₹138.

The problem with lesser ARPU has become a vicious cycle in the case of Vodafone Idea. If it raises tariffs to improve its earnings, and others don’t, the company will lose more subscribers.

If others follow VI in raising tariffs, they make more money, which can be later used to edge it out. The longer VI waits for others to make the first move, the more money it bleeds.

Vodafone has more spectrum compared to Jio but still gets the least amount of traffic

According to data from a UBS report dated July 29, here’s how much spectrum all the three telecom operators held at the end of March, 2021:

Company	Spectrum holding
Airtel	2,112 MHz
Vodafone Idea	1,768 MHz
Reliance Jio	1,752 MHz

Source: UBS, as of March, 2021

Despite holding the second largest chunk of spectrum, Vodafone Idea’s inability to upgrade its users to 4G has hampered its potential – both in terms of the number of 4G subscribers as well as the amount of data it serves.

Company	4G subscribers (in million)	Total data (in million GB)
Reliance Jio	426.6	16,700
Airtel	179.3	9,207
Vodafone Idea	113.9	4,856

Source: UBS, as of March, 2021

The odds are stacked against Vodafone Idea

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.

“It is well-flagged that Vodafone Idea has large repayments due starting Dec ‘21, and its balance sheet is stressed,” the report adds.

“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.

On the other hand, analysts are bullish on Airtel.

Brokerage	Target price	Upside
JP Morgan	₹790	38%
Credit Suisse	₹750	31%
CLSA	₹730	27%
Goldman Sachs	₹675	17%

Note: Upside compared to Airtel’s share price of ₹574, on August 4, 2021

SEE ALSO:

As Vodafone Idea shares dive 10% and more, here's a look at what analysts had to say about it prospect in recent weeks

Vodafone Idea sinks nearly 10% and Airtel tumbles a bit after India’s Supreme Court denies a discount on past dues

Airtel and Vodafone Idea get 10 years to repay AGR dues – here’s a timeline of the case