Vodafone Idea 'Headed To Bankruptcy', Says Capitalmind's Deepak Shenoy
The telecom operator has bit off the worst amongst peers on the Supreme Court's verdict on the AGR dues case.
Vodafone Idea’s mounting debt obligations and its inability to generate sufficient cash flow are driving a bleak outlook for the company and it "seems headed to bankruptcy", said Capitalmind CEO and portfolio manager Deepak Shenoy.
The company will "at some point, just run out of money," he said via a post on X. This comes after the company bit off the worst amongst peers on the Supreme Courts verdict on the Adjusted Gross Revenues dues case.
The telecom operator has an upcoming cash flow crunch, with payments of Rs 30,000 crore due between Oct. 2025 and March 2026, followed by annual payments of Rs 43,000 crore over the subsequent five years, according to the post.
Vodafone Idea has an upcoming cash flow crunch, with payments of Rs 30,000 crore due between Oct. 2025 and March 2026, said Deepak Shenoy of Capital Minds.
(Source: Official X Account)
Shenoy suggested that a fourth player could potentially enter the market and take advantage of Vodafone Idea's financial difficulties. "It's sad, but it will be a killer deal if a fourth player emerges when this company is super weak on cash flows - it can quite easily pick off the pieces," he said, noting that unless Vodafone Idea can engineer a "miracle" in the next few years, its survival seems unlikely.
The company's efforts to raise Rs 18,000 crore through a Follow-on Public Offering would be insufficient to cover these staggering liabilities, he said. It could potentially convert some of the company's debt into equity but Shenoy believes that there is limited scope to absorb the massive payments due next year.
His comments come amid heightened concerns following the Supreme Court’s ruling on Thursday that rejected telecom operators' plea seeking a re-computation of their AGR.
Vodafone Idea's AGR liability stood at Rs 70,300 crore as of June, accounting for 33% of its gross debt.
This marks a significant setback for the company, which has been struggling with a prolonged financial crisis since the 2019 judgement that required the inclusion of non-core revenue in the calculation of AGR, leading to an enormous increase in liabilities.
Shares of the company were trading 5.08% lower at Rs 9.91 apiece compared to a 0.54% advance in the benchmark Nifty 50 as of 10:14 am.
