Vodafone Idea Faces DoT Notice for Missing ₹6,091 Crore Bank Guarantee Deadline
Business and Industry Overview:
Vodafone Group Plc is a multinational telecom firm based in the United Kingdom. Its global headquarters and registered office are located in Newbury, Berkshire, England. It predominantly operates services in Asia, Africa, Europe, and Oceania. As of January 2025, Vodafone owns and operates networks in 15 countries, with partner networks in 46 further countries. Its Vodafone Global Enterprise division provides telecommunications and IT services to corporate clients in 150 countries. Vodafone has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. The company has a secondary listing on the NASDAQ as American depositary receipts (ADRs).
Vodafone India is the Indian subsidiary of the UK-based Vodafone Group. It provides telecommunications services in India and has its operational head office in Mumbai. The Vodafone Idea network has approximately 375 million subscribers and is the third-largest mobile telecommunications network in India.
Currently, India is the world’s second-largest telecommunications market, with a total telephone subscriber base standing at 1,203.69 million and having registered strong growth in the last decade. The Indian mobile economy is growing rapidly and will contribute to India’s Gross Domestic Product (GDP), according to a report prepared by the GSM Association (GSMA) in collaboration with Boston Consulting Group (BCG). Vodafone Idea is one of the dominant players in the market, with an 18.19% market share.
Latest Stock News:
Vodafone Idea’s share price dropped 5% after the company missed the Rs 6,091 crore bank guarantee deadline. The Department of Telecommunications (DoT) had asked Vi to either submit a bank guarantee or pay Rs 5,493 crore in cash by March 10 for its 2015 spectrum auction dues. This comes after the DoT waived Rs 24,800 crore in bank guarantees for previous spectrum auctions but did not extend the waiver for 2015 dues.
Adding to its troubles, Motilal Oswal downgraded Vodafone Idea’s stock to ‘Sell’ from ‘Neutral’ and cut its target price to Rs 5, citing declining market share, subscriber losses, and weaker customer engagement. The brokerage also lowered Vi’s EBITDA estimates by 7%-8% for FY26 -27 due to lower revenue per user.
In Q3 FY25, Vodafone Idea reported a net loss of Rs 6,609.3 crore, improving slightly from Rs 7,175.9 crore in the previous quarter. However, revenue rose 1.7% quarter-on-quarter to Rs 11,117.3 crore, and average revenue per user (ARPU) increased to Rs 173 from Rs 166. Despite this, Vi continues to face severe financial and operational challenges, and investors are closely watching how the company will manage its growing debt and market competition.
Vodafone Idea is struggling because many people are switching to other telecom companies. In December 2024, the company lost 1.7 million customers, while Reliance Jio gained 3.9 million new users, and Airtel added 1 million. As of December 31, 2024, Jio had the most subscribers (476.58 million), followed by Airtel (289.31 million) and Vodafone Idea (126.38 million).
Jio also leads in broadband services with 50.43% of the market, while Airtel holds 30.62%, and Vodafone Idea controls only 13.37%. Because fewer people are using Vodafone Idea’s services, its stock price dropped more than 6% in one day. Over the past year, the stock fell 47%, and from its highest price of ₹19.15 in June 2024, it has dropped 64% to ₹6.87.
Vodafone Idea is facing tough competition from Jio and Airtel, which keep growing, while Vodafone Idea keeps losing customers. The company needs to fix its problems, attract more users, and improve its financial situation to survive in the telecom market.
Potentials:
Vodafone Idea is working hard to fix its problems and get more customers. It plans to improve its 4G network so people can enjoy faster internet and fewer call drops. The company also wants to launch 5G services, but it needs a lot of money to do that. Since Vodafone Idea has a huge debt, it will ask investors for money and take loans to pay what it owes.
To stop customers from leaving, Vodafone Idea will offer better recharge plans and discounts and improve network quality. It will also expand its services for businesses, offering things like cloud storage, security solutions, and IoT (smart technology) services. The Indian government now owns a big part of Vodafone Idea and might help the company with its financial troubles.
Vodafone Idea will focus on villages and small towns by offering cheaper mobile plans to attract more users. The company must raise enough money, keep its customers happy, and launch 5G soon if it wants to survive and compete with Reliance Jio and Airtel.
Analyst Insights:
- Market capitalisation: ₹ 50,546 Cr.
- Current Price: ₹ 7.08
- 52-Week High/Low:₹ 19.2 / 6.60
- Dividend Yield: 0.00 %
- Return on Capital Employed (ROCE): -3.61 %
Vodafone Idea is in big financial trouble. It is losing money every quarter (-₹6,986 Cr. in Q3 FY24) and has a huge debt (₹2,50,167 Cr.). The company’s sales growth is very slow (2.83% in 5 years). It earns less per customer than Airtel and Jio. Even with price hikes, its market share is shrinking. Interest costs are high, and investors are losing confidence (promoter holding fell by 33.2% in 3 years). The company has no profits, no dividends, and a negative book value (-₹13.7). Due to weak financials and tough competition, it’s better to SELL.