Govt’s `36,950 cr equity conversion to ease Vi’s financial stress, say experts

The government’s decision to convert Rs 36,950 crore of Vodafone Idea’s (VIL) outstanding spectrum auction dues into equity is expected to ease the telecom operator’s financial stress, enabling it to focus more on improving operations and technology, say industry experts.

According to Prashanth Tapse, Research Analyst and Senior Vice President (Research) at Mehta Equities, the company’s future outlook will largely depend on its ability to launch 5G mobile broadband services effectively and manage subscriber churn. While the recent development may bring short-term relief to investor sentiments, the long-term outlook remains subdued.

“The recent development that the government is raising its stake to 48.99% in Vi will ease some financial stress and help Vi to focus more on improving operations and technology. Despite this material development the challenges to raise capital and network expansion will continue to dent investors’ concerns. These developments may influence investor sentiments but will not address the challenges,” said Tapse.