Telecom outlook 2024: Experts weigh in on key sector drivers, Vodafone's debt woes

Sanjay Kapoor, former CEO of Airtel, and Balaji Subramanian, Vice President of IIFL Securities discussed the major trends from tariffs to new technologies that could drive the telecom sector in 2024.

They also shared their view on Vodafone Idea's debt pile in the context of the spike in its stock. Shares of the telecom service provider were up 10% on January 2 after having gained 21% on Friday, December 29.

“The moot question here is what happens to Vodafone Idea given the huge amount of debt that they carry. From a business perspective, I actually don't see a business case where somebody from any part of the world will come and say, I am willing to fund this company, and bear all the debt burden that this company has, and catch up with the market players and compete with them and make a business virtue out of this going forward, I actually don't see that happening,” Kapoor said.

Read Here | Vodafone Idea Shares In 2023: Fund raise remains elusive with no clarity on 5G timelines

Subramanian said there is potential for promoters to inject equity into Vodafone Idea. However, there is still need for substantial investment, considering the looming moratorium on spectrum and adjusted gross revenue (AGR) payments until late 2025.

“...the government also has got an option to convert the principal during the moratorium into equity, which means that whoever enters the stock right now sees a significant dilution potentially. So that is why It makes things a little tricky,” he noted.

The telecom experts also shed light on the challenges for the telecom sector. Kapoor believes the biggest dilemma that most telecom companies face now is whether to double down on 5G or try and cover up the investments that have made since it's become tough to monetise 5G. "There are more newer technologies coming in we are talking AI, we are talking IoT, we are talking storage," he noted.