Telecom operator Vodafone Idea (Vi), which has been struggling with huge debt and continuous subscriber losses, has now outlined a massive investment plan, following the much-needed relief on Adjusted Gross Revenues (AGR) it received from the government last month.
The company has planned Rs 45,000 crore capital expenditure over the next three years towards network deployment along with a strong marketing push, as it looks to strengthen its operations and claw back market share. This planned capex is in addition to the Rs 18,000 crore that it spent over the past six quarters and could result in sustained subscriber additions, double-digit revenue growth and cash EBITDA (earnings before interest, taxes, depreciation and amortisation) trebling over financial years 2026-2029, the company estimates.
Vi's capex push follows the centre's decision to freeze the telco's AGR dues for the 2006-07 to 2018-19 period.
The company, which had AGR dues of more than Rs 87,000 crore, now needs to pay Rs 124 crore a year between FY2026 and FY2031, Rs 100 crore over the following four years (FY2032-35) and the remaining balance in six equal instalments between FY2036-41.
Behind its latest investment push is Vi's plan to regain coverage parity in 17 priority markets, expand 4G coverage, as well as offer seamless 5G experience across urban markets, among other things.
Sanjesh Jain of ICICI Securities says the company's investment plans are "ambitious", with a revenue ask rate of 17.5 per cent compounded annual growth over FY2026-29, 1.5 times the industry growth, but "critical for the turnaround."
Jain noted that Vi had seen healthy growth in average revenue per user (ARPU), but that didn't translate into revenue due to a continuous decline in subscribers.
The subscribers have been declining due to under-investment in its 4G and 5G network and market concerns over its continuity pending the AGR resolution earlier.
Vi's customer ARPU has increased to Rs 186 in the October-December quarter from Rs 173 a year earlier, primarily supported by customers upgrading to 4G and 5G. However, total subscribers have declined to 192.9 million in the December quarter from 196.7 million as of September 30, 2025.
The fresh investments in network and marketing should hopefully fix these issues.
Dayanand Mittal of JM Financial Institutional Securities estimates that the next round of tariff hikes in the industry would only happen around July-August 2026, rather than the earlier assumption of December 2025-January 2026 and has therefore cut revenue as well as EBITDA estimates for financial years 2026-28 by 8-16 per cent.
The extent of tariff hikes and Vi's ability to grow its subscribers will be a key thing to monitor. Should Vi not be able to arrest the decline in subscribers and the tariff hike be lower, there could be downside risks to its earnings estimates, Mittal noted.
On the other hand, sharp tariff hikes and further relief on dues by the government could boost earnings.
Other than more rational competition on subscriber addition, and continuation of a benign regulatory regime, Vi's revival also hinges on its ability to close the debt fund raising, which it has been trying to do for some time, according to analysts at Motilal Oswal Financial Services.
Vi has been discussing with lenders to raise Rs 25,000 crore from lenders, but hasn't fructified with banks awaiting clarity on government liabilities.
"Given peers’ superior FCF (free cash flow) generation and offerings, we believe retaining its current subscriber market share itself would prove to be a tall ask for Vi," the analysts at Motilal Oswal said.
They also added that if Vi were to start becoming a competitive third player, they would expect peers to raise the competitive intensity.
The Motilal Oswal analysts have raised their revenue estimates for the financial year 2027-28 by 4 per cent. EBITDA estimates have also been raised, but are significantly below management ambitions, they noted.
