Jefferies believes the Government of India’s decision to convert Vodafone Idea’s ₹36,950 crore spectrum dues into equity marks a key turning point in the telecom sector. With this move, the government’s stake in Vi will rise to around 49%, nearly double that of the promoter group.
Despite this relief, Jefferies noted that Vi’s balance sheet remains stretched with leverage at 18x EBITDA. For Vodafone Idea to sustain and grow, it will need substantial tariff hikes and possibly more regulatory interventions — developments that would be supportive of Bharti Airtel and Reliance Jio.
Jefferies expects the short-term cash flow relief to potentially enable Vodafone Idea to resume capex, which could benefit tower infrastructure provider Indus Towers. However, Bharti Airtel remains Jefferies’ preferred pick in the sector, given its robust balance sheet, subscriber quality, and diversified revenue profile.
