Akshaya Moondra New Vodafone Idea CEO

Akshaya Moondra will be the new chief executive of Vodafone Idea and resume the charge soon. One of the challenges lying ahead for the future of India's third-largest wireless provider will be raising 20,000 crore from outside investors. 

Moondra, who is currently the CFO, will also be anticipating the government's decision to convert interest on spectrum debt of 16,000 crore resulting from the four-year moratorium into approximately 33% equity to be held by the government, which has further delayed the conclusion of the external capital raise. With Airtel and Jio slated to start services shortly and scale up nationally, the carrier is also anticipated to face fierce competition in the 5G space. Vodafone Idea is structurally at a disadvantage, in our opinion.

With Airtel and Jio slated to start services shortly and scale up nationally, the carrier is also anticipated to face fierce competition in the 5G space. Because it lacks sufficient spectrum and has a worse balance sheet than Jio and Bharti, Vodafone Idea is structurally at a disadvantage "Bank of America analysts stated in a note. 

"An additional delay in the capital round could cause its two stronger competitors to keep losing market share. The company's ability to make its increased payments to the government after the four-year moratorium period ends (potentially 40,000 crore per year) is also still very uncertain, necessitating much larger tariff increases and/or additional government relief "a Citi Research analyst said.

Analysts claim that the company's high debt levels combined with recent auction commitments to buy 5G spectrum will make leverage management more difficult. With a total of 1.16 trillion pounds, or around 60% of the deferred spectrum, 67,300 crores in AGR debt, and 15,200 crores in bank debt, 5,000 crores of which must be repaid by the end of FY23, Vodafone Idea had a gross debt of 1.99 trillion pounds. "Over the past three years, Jio and Bharti's 4G conversions have been difficult for VIL to keep up with. Its lower ability to invest in the network for coverage and capacity is further hampered by higher regulatory payouts from the AGR case verdict and greater spectrum outgo (post moratorium), according to analysts at JP Morgan.