Telecom operator Vodafone Idea showed early signs of operational improvement in the March quarter, as its subscriber base stabilised and average revenue per user (Arpu) rose.
Analysts, however, said the company’s long-term recovery still hinges on securing larger funding to manage spectrum liabilities and improve services.
On Saturday, the company’s board approved a ₹4,730 crore fund infusion from promoter Aditya Birla Group entity Suryaja Investments Pte Ltd, through issuance of 4.3 billion equity-convertible warrants at ₹11 per share.
The funding is largely seen as a signal to lenders that promoters are backing the company at a time when has been struggling to secure much-awaited bank financing, according to analysts.
“The warrant issue is a positive signal because it reflects continued promoter commitment and brings fresh capital into Vodafone Idea. But ₹4,730 crore by itself is not large enough to resolve the company’s structural challenges,” said Parag Kar, an independent telecom analyst.
The bigger challenge remains spectrum liabilities, future payment obligations, capex needs, and cash-flow generation. “The equity infusion may improve sentiment, but meaningful bank funding will still require stronger lender comfort through visible cash flows, promoter support, guarantees, or other credit-enhancing structures,” he said.
Vodafone Idea has called an extraordinary general meeting on 11 June to seek shareholder approval for the proposed preferential issue. The warrants are convertible instruments that will enable staggered promoter funding in Vodafone Idea over 18 months, with 25% or ₹1,182 crore being paid upfront at issuance.
At full conversion of warrants into equity, Aditya Birla Group promoter entity will get 3.82% stake and government’s shareholding in the company will reduce to about 47% from 49%, thereby giving the scope for further equity conversion to the government.
As of March-end, Vodafone Idea has a deferred spectrum liability of ₹1.27 trillion. While the adjusted gross revenue (AGR) dues are frozen, Vodafone Idea faces spectrum payment obligations of about ₹49,000 crore over the next three years. The instalment would be ₹7,000 crore in the first year, ₹15,000 crore in the second and around ₹27,000 crore in the third.
“The Group is confident of generating sufficient cash flow from operations to meet its obligations, including lenders, spectrum and payable over the next 12 months as and when they fall due,” the company said in its Q4 financial statement.
In January, the company unveiled a ₹45,000-crore capital expenditure plan for the next three years. To support the plan, it is looking to raise ₹25,000 crore in bank funding and ₹10,000 crore in non-funded facilities, which it has not been able to raise so far.
Payment overhang
“The government’s clarity on final AGR amount is positive for the company, but given the company already has a spectrum payment overhang with some borrowings, it is still not out of the woods,” said Shriram Subramanian, founder and managing director of InGovern Research Services.
Banks will find it difficult to lend more funds, given the current debt burden and operating profits, Subramanian said.
In the fourth quarter, Vodafone Idea managed to arrest subscriber churn compared to the previous quarter. “…our subscriber addition turned net positive since February 2026, a meaningful milestone that reflects the impact of our sustained network investment,” said Abhijit Kishore, chief executive officer of the company.
The company’s subscriber base stood at 192.8 million at the end of March, compared with 192.9 million in the previous quarter. Analysts said sustained additions to the postpaid base, which rose to 30.1 million, is a positive.
“The government has been converting dues into equity for Vodafone Idea and now the promoter’s fundraise commitment is positive for the company for the short-to-medium term. The company, however, still needs to regain customer confidence, expand its offerings and network to regain the lost glory,” said Kranthi Bathini, director of equity strategy at broking company WealthMills Securities.
Bathini added that Vodafone Idea remains suitable only for investors with a high-risk appetite.
Vodafone Idea’s Arpu rose 1.16% sequentially to ₹174 a month from ₹172 in the December quarter, outperforming peers Bharti Airtel and Reliance Jio despite two fewer billing days during the period. This was due to network upgrades and migration of users from 2G to 4G/5G services.
reported Arpu of ₹214 a month at the end of March, while Bharti Airtel posted ₹257, both largely flat sequentially.
During the quarter, Vodafone Idea reported its first net profit in about six years at ₹51,970 crore owing to a one-time accounting gain from the government’s AGR re-calculation. It incurred losses of ₹7,167 crore and ₹5,286 crore in the year-ago and quarter-ago periods, respectively.
Excluding the exceptional gain, the fourth-quarter loss stood at ₹5,515 crore.
Revenue from operations, which has been improving marginally, rose 2.9% year-on-year and 2.3% sequentially to ₹11,332 crore in the quarter.
At the company’s earnings call on Monday, analysts and investors will focus on management’s commentary on bank funding, network expansion, timing of promoter funding infusion, tariff hike, and the subscriber trends.