has more than doubled in three months but we see further upside from average revenue per user (Arpu) growth, likely AGR resolution and potential floor tariffs. With the return of growth led by tariff hikes, Vodafone Idea promoters may assess incremental funding, irrespective of AGR cases outcome. With the stock’s risk reward still favourable, we reiterate ‘buy’ and maintain Rs 12 target based on 8 times enterprise value (EV)/Ebitda one-year forward Ebitda of FY22,”CLSA analyst Deepti Chaturvedi wrote in a note.
The company has also seen significant erosion in its subscriber base. CLSA expects the loss to stem. “Since the merger, Vodafone Idea has lost 118 million subscribers to 304 million but loss should slow and we forecast FY20-22 incremental loss of 20 million, lower than the loss in the past 12 months. Further, Vodafone Idea has safeguarded its 23 million post-paid subscriber base, which is 46 per cent higher than Airtel’s base and far ahead of Reliance Jio,” CLSA note said.
The verdict in the AGR court case is in standstill because of the Covid-19 pandemic. According to the company’s self-assessment, the dues at about Rs 21,500 crore. “Vodafone Idea has paid $0.9 billion towards AGR dues and Vodafone Plc has committed $1.1 billion towards AGR payments. The industry awaits a final verdict and likely approval of staggered payments,” the CLSA note said.
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