18% Rally In 5 Days: Vodafone Idea, ATC Agree To Extend Redemption Of 1st Tranche Of OCDs

Vodafone Idea on Monday said that the company and ATC Telecom Infrastructure have agreed to extend the period of redemption of 8000 OCDs from 6 months from the date of the allotment of the first tranche which was due on August 28, 2023. The redemption period is extended maximum to 18 months. This has been mutually agreed between the duo. Vi share price traded volatile.

In its regulatory filing, Vodafone Idea said, "We wish to inform you that, the Company and ATC have agreed to extend the period of redemption of 8000 OCDs from 6 months, from the date of allotment of first tranche of OCDs (which was falling due on 28th August, 2023), to 18 months from the date of allotment, subject to certain conditions as mutually agreed."

Earlier, this year, Vodafone Idea on February 27th allotted a total of 12000 unsecured, unrated and unlisted Optionally Convertible Debentures of the face value of Rs 10 lakh each (OCDs) to ATC Telecom Infrastructure, to raise capital. Further, on February 28th, the company allotted another 4000 number of OCDs to ATC. With this, the total allotment stood at 16000 OCDs to ATC.

The transaction in February was valued at Rs 1,600 crore. Vodafone Idea has informed exchanges that the funds raised would be utilised for paying the amounts it owed to ATC under the master lease agreements, and for general corporate purposes.

In the early deals of Monday, the telco's stock dipped by at least 2.2% on BSE. However, currently, it gained traction and was trading at Rs 8.88 apiece up by 2.2%, which was near its day's high of Rs 8.92 apiece. The company's m-cap stood at over Rs 43,081 crore at the current price level.

With the latest performance, Vodafone Idea shares are moving to a record five-consecutive day's winning streak. The stock has been rising since August 22. Last week, on Friday, the stock skyrocketed by a whopping 9.31% to end at Rs 8.69 apiece on BSE.

Taking into consideration the latest intraday high of Rs 8.92 apiece, Vodafone Idea has gained by nearly 18% since August 22.

In the June 2023 quarter, the company reported a net loss of Rs 7,840 crore, widening from Rs 6,418.9 crore a year ago same quarter. However, it posted revenue of Rs 10,655.5 crore versus Rs 10,531.9 crore in Q1 of FY23. Also, EBITDA stood at Rs 4,157 crore in Q1FY24, slightly down from Rs 4,210.3 crore in the corresponding quarter of the previous year.

Vodafone Idea has received a communication from a promoter group entity confirming that in the event of any fund requirement for meeting its impending payment obligations by the Company, it shall provide direct or indirect financial support to the extent of Rs 2,000 crore, as per the regulatory filing.

Post the Q1 earnings, Yes Securities said, "It continues to lose subscribers (mainly in the 2G segment) and that adversely impacts revenue
growth. The addition of 4G subscribers remains muted. It needs capital infusion to augment the capital expenditure to catch up with peers in terms of 4G coverage/capacity. It has still not announced any timeline with regard to 5G implementation. We expect that 2G to 4G migration would continue to drive ARPU growth."

Also, in the quarter, the company's 4G subscriber base continued to grow for the eighth consecutive quarter and stood at 122.9 million versus 122.6 million in Q4FY23. However, the overall subscriber base declined to 221.4 million versus 225.9 million in Q4FY23. ARPU improved to Rs 139 in Q1FY24, up 2.9% QoQ versus Rs 135 in Q4FY23 primarily aided by the migration of subscribers to higher ARPU plans.

The brokerage's note added, "We expect EBITDA Margin to improve in near term led by continued focus on operational efficiency. We estimate a revenue CAGR of 10.7% over FY23‐25E with average EBITDA margin of 41.0%. We maintain our SELL rating on the stock with target price of Rs 6/share based on EV/EBITDA of 8.5x on FY25E. The stock trades at EV/EBITDA of 14.1x/11.7x on FY24E/FY25E."

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