Voda-Idea needs more funds in FY21

Mumbai: Vodafone Idea, which is in the process of raising Rs 25,000 crore through a rights issue, will again require a funding next fiscal as it loses market share, a foreign brokerage said on Thursday.

Market repair in the battered telecom sector is at least a year away as the disruptor Reliance Jio continues to focus on subscriber additions, Jefferies said.

Operators will raise at least Rs 1 lakh crore in core equity in the first half of the ongoing fiscal, it said, stressing that the largest telco Vodafone Idea will require funding again next fiscal to fund capex and spectrum repayments.

Vodafone Idea will lose market share to come down to 25 percent over the next 18 months and hence will require funding again, it said, adding that second biggest telco Bharti Airtel's market share will remain stable at 30 percent.

It can be noted that it had a market share of over 35 percent as of December 2018, according to reports.

Price hikes necessary for improvements in financial conditions of telcos are unlikely in FY20 and will happen only after Jio becomes the dominant player with 40 percent market share in FY21, it said.

On the fund-raising plans, the brokerage said apart from Vodafone Idea's Rs 25,000 crore rights issue, there is Bharti's fund raising for a similar amount through the same route.

It also hinted that the remaining Rs 50,000 crore will be done by Jio's fiber and tower infrastructure investment trusts (InVITs) will need equity funding for the majority of the Rs 1.1 trillion in liability.

The report explained that Jio has de-merged its fiber and tower assets into a separate company which is majority owned by an InvIT.