Vodafone Idea Ltd.'s shares dropped more than 2 percent in intraday trade on Monday to hit a fresh 52-week low of Rs 6.13 on the BSE amid speculations of the telecom operator facing a potential cash crunch due to the anticipated delay in tariff hikes.
For the Indian telecom sector, Kotak Securities estimates that the tariff hike will be delayed until the General Election in 2024 while forecasting a 20 percent tariff hike in smartphones from June 2024 compared to the chances of an anticipated hike in September 2023.
The brokerage believes debt-ridden Vodafone Idea could be the worst hit due to likely delays in the tariff hike.
As per its estimates, Kotak Securities projects a potential cash shortfall of approximately Rs 55 billion for Vodafone Idea in the coming 12-month period.
It further added that a delay in tariff hike or fundraising could impact Vodafone Idea’s financials to the extent that the beleaguered Indian telecom player could be forced to shut its shop.
On the other hand, Kotak Securities is of the opinion that the aforementioned delay in tariff hike would effectively lead to a duopoly in the Indian telecom sector, thereby resulting in accelerated market share gains for the leading telecom player Reliance Jio.
Regarding Vodafone Idea, Goldman Sachs noted that it does not see any immediate cash flow relief for the company, adding that it would take place only from the financial year 2025-26. The brokerage firm expects Vodafone Idea to need a total capital of $8-$10 billion.
Shares of Vodafone Idea are trading 2.40 percent lower at Rs 6.10.
(Edited by : Rukmani Krishna)
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