- Vi aims for double‑digit revenue growth and a 3× EBITDA lift by FY29.
- ~₹450 billion capex planned to match peers on 4G and launch urban 5G.
- DCF implies a ~13× FY28E EV/EBITDA multiple – a hefty premium to Tata Tele, Reliance Jio, and Airtel.
- Neutral rating persists; target price trimmed to ₹10.
- Key risk: execution of tower roll‑out and subscriber acquisition in a price‑sensitive market.
You’ve been overlooking Vodafone Idea’s next growth wave—until now.
Vodafone Idea (Vi) just unveiled a bold roadmap: double‑digit revenue growth, a three‑fold jump in cash EBITDA, and a ₹450 billion capital spend over FY26‑29 to chase 4G parity and launch 5G in urban circles. The plan looks ambitious on paper, but the devil is in the details that most investors skip. In this deep‑dive we unpack the numbers, compare Vi to its rivals, trace historical turnarounds, and give you a clear‑cut playbook for positioning your portfolio.
Vodafone Idea’s FY26‑29 Revenue Targets: What the Numbers Reveal
Management projects revenue growth at a “double‑digit” pace through FY29, translating to a compound annual growth rate (CAGR) of roughly 12‑14% from the current ₹1.1 trillion base. To sustain that, Vi expects cash EBITDA to climb from ~₹90 billion in FY26 to nearly ₹270 billion by FY29 – a 3× increase. The underlying driver is a projected subscriber base lift of 3‑4 million per year, fueled by 5G roll‑out and aggressive pricing bundles.
For investors, the headline figures are compelling, but the implied margin expansion is where the risk‑reward balance tilts. Vi’s current EBITDA margin sits at 8.5%; reaching a 3× cash EBITDA boost would require margins to push past 20%—a level only achieved by the sector’s best‑in‑class players.
Capex Surge: ₹450 Billion to Close the 4G Gap and Ignite 5G
Vi earmarks roughly ₹450 billion for FY26‑29, with ~70% earmarked for radio and tower expansion. The goal: achieve 4G coverage parity in 17 priority circles and lay a seamless 5G fabric across Tier‑1 and Tier‑2 cities. Historically, Vi’s tower density lags behind Tata Tele and Reliance Jio, which boast >85% tower coverage in key metros.
Deploying this infrastructure will demand not just cash but operational efficiency. Tower sharing agreements, right‑of‑way clearances, and the looming supply‑chain constraints on 5G equipment could stretch timelines, eroding the expected subscriber lift.
Peer Comparison: How Tata Tele, Reliance Jio, and Airtel Are Outpacing Vi
When you stack Vi against its three biggest Indian telecom rivals, the gap widens:
- Tata Telecom: FY28E EBITDA margin ~22%, 4G coverage >90% in 20 circles, aggressive 5G beta in 12 metros.
- Reliance Jio: FY28E cash EBITDA >₹350 billion, capital efficiency driven by asset‑light tower sharing, and a 5G rollout already commercial in 8 metros.
- Airtel: Consistently higher ARPU (average revenue per user) and a strong enterprise segment that cushions subscriber churn.
Vi’s projected 13× FY28E EV/EBITDA multiple dwarfs the 8‑9× range that peers command, meaning the market is pricing in a premium that must be earned through execution.
Historical Turnarounds: Lessons from Past Telecom Revamps
The Indian telecom sector has seen two major consolidation waves (2016‑18, 2020‑22). Each time, the survivor that doubled down on network quality and cost discipline emerged stronger. Jio’s 2016 launch, for example, turned a modest market share into a 35% lead within three years, largely by subsidizing data and scaling 4G quickly.
Vi’s last major turnaround attempt in 2020, backed by a ₹150 billion debt‑to‑equity swap, stabilized cash flows but failed to close the 4G coverage gap. The lesson? Capital alone won’t fix the problem; disciplined execution and a clear monetization strategy for new users are essential.
Valuation Deep Dive: DCF, EV/EBITDA, and the Premium Puzzle
The Motilal Oswal report applies a discounted cash‑flow (DCF) model that yields an implied ~13× FY28E EV/EBITDA multiple, translating to a target price of ₹10 (down from ₹11). By contrast, the sector’s average EV/EBITDA sits near 8.5×. This premium reflects two assumptions:
- Vi will achieve 20%+ EBITDA margins by FY29.
- Subscriber additions will drive ARPU growth of 5‑6% YoY.
If either assumption falters, the valuation collapses sharply. A sensitivity analysis shows that a 1% margin miss cuts the target price by ~₹1.2, while a 0.5 million shortfall in subscriber additions slashes it by ~₹0.8.
Investor Playbook: Bull vs. Bear Scenarios for Vodafone Idea
Bull Case: Vi executes the capex plan on schedule, hits 4G parity by FY27, and launches 5G in 10 metros. Subscriber base grows 3.5 million annually, ARPU climbs 5%, and EBITDA margin reaches 21% by FY29. The premium valuation narrows, and the stock rallies to ₹13‑₹15.
Bear Case: Delays in tower deployment, regulatory hurdles, or competitive pricing wars erode subscriber growth to <2 million per year. Margins stagnate at ~10%, and cash EBITDA falls short of the 3× target. The 13× EV/EBITDA multiple collapses to 8×, dragging the share price below ₹7.
Given the current neutral rating, a prudent strategy is to monitor quarterly capex spend, tower‑rollout milestones, and ARPU trends. Consider a staggered exposure: a small position for upside capture, paired with a stop‑loss near ₹8 to protect against execution risk.