Vodafone Idea likely to lose up to 70 million subscribers over next year: Fitch

New Delhi: Vodafone Idea (Vi) is expected to lose 50-70 million subscribers in the next 12 months after haemorrhaging 155 million subscribers in the last nine quarters, Fitch Ratings said, adding that Reliance Jio Infocomm could net more than half of Vi’s subscriber losses, with Bharti Airtel bagging the rest. “We expect Bharti and Jio to increase their combined revenue market share to 80% (it was around 74% by September) in the next 12-18 months,” Fitch Ratings said on Monday. In the second quarter, Airtel added 14 million subscribers — double that of Jio's seven million. Vodafone Idea is rapidly losing market share given its weak balance sheet and limited financial flexibility. Fitch said Vodafone Idea's plan to raise about $3.4 billion through a mix of equity and debt is unlikely to restore its competitive position and reverse subscriber losses, as it would still be insufficient capex. 79498837 Vodafone Idea has so far paid about $1.1 billion of its total $8.9 billion dues required to be paid to the telecom department as adjusted gross revenue (AGR).Outlook on Airtel Fitch Ratings on Monday also affirmed Airtel’s long-term foreign currency issuer default rating (IDR) and senior unsecured rating at ‘BBB-’. The outlook on IDR is negative. It also affirmed Bharti Airtel International (Netherlands) BV’s senior unsecured guaranteed bonds at ‘BBB-’ and Network i2i Limited’s subordinated perpetual bond at ‘BB’. Fitch, however, added that the negative outlook does not reflect its view of Bharti's underlying credit profile — which has been improving due to strong growth in the Indian and African wireless operations — but rather the heightened probability that India's country ceiling (BBB-) could be lowered to ‘BB+‘. “Such an action would constrain Bharti’s IDR and senior issue ratings to BB+."“"We forecast Bharti’s (FY21) funds from operations (FFO) net leverage to be 2.2x-2.4x, below the threshold of 2.5x above which we will take negative rating action, the agency said in a release. “We expect Bharti's FY21 revenue and Ebitda to rise by around 17%-25%, on improvement in the Indian wireless market and continued strong growth in African markets,” Fitch said. It added that Airtel’s Indian wireless Ebitda is expected to rise 40-50% in FY21, led by 15 million subscriber additions and monthly average revenue per user (ARPU) improvement of 10%-12%. The agency also expects Airtel to generate small positive free cash flow in FY21 on flat core capex, lower interest costs and the two-year moratorium on the payment of existing spectrum dues, which will defer about $840 million in each of FY21 and FY22. “We expect FY21 as absolute core capex will most likely be flat at ₹210-220 billion (FY20: ₹221 billion), ignoring one-time payments for spectrum assets,” noted the ratings agency.

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