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In its note, released over the weekend, Motilal Oswal said that the benefits of tariff hikes have been limited for Vodafone Idea, given its inferior subscriber mix and continued decline in subscribers.
The brokerage said that despite three rounds of smartphone tariff hikes and a near-doubling of the popular plan pricing, Vodafone Idea’s wireless revenue is still nearly 2% below its wireless revenue in September 2019 as subscribers continue to decline.
Even in the latest tariff hike, Vodafone Idea’s annualised wireless revenue is up 7% or ₹2,600 crore, compared to the blended tariff hikes of 17%.
Given the consolidated market structure in the Indian telecom industry, higher data consumption, one of the lowest ARPUs globally, and inadequate returns generated by telecom companies, Motilal Oswal is expecting one more round of a tariff reset. “We continue to build a nearly 15% tariff hike or ₹50 per month rise in the base pack in December 2025,” the brokerage said.
Vodafone Idea is embarking on a significant capex cycle over the next two to three years to bridge the network gap with peers. “However, we believe that Vodafone Idea’s capex plans are contingent on a debt raise and further relief from the government,” Motilal Oswal said in its note.
Despite this, the brokerage said that Reliance Jio and Bharti Airtel will continue to gain market share at Vodafone Idea’s expense.
Motilal Oswal has a “sell” rating on Vodafone Idea with a price target of ₹5, which implies a 37.5% downside from Friday’s closing levels.
Four out of the 21 analysts that have coverage on Vodafone Idea have a “buy” rating on the stock, while 12 of them have a “sell” rating. The other five have a “hold” recommendation.
Shares of Vodafone Idea ended 2.9% lower on Friday at ₹8.03. The stock is down over 60% from its 2024 peak of ₹19.17 and also trades below its FPO price of ₹11.
