Vodafone Idea: Shares of Vodafone Idea Ltd climbed sharply on Friday, gaining close to 12% as investors positioned themselves ahead of the Union Budget 2026. The advance came despite the absence of any new corporate announcement or stock exchange disclosure from the company. Market participants attributed the surge to renewed optimism around potential policy support for the telecom sector, which has been grappling with high regulatory costs and capital-intensive expansion requirements.

The rally pushed the stock to its intraday high and placed it well ahead of most sector peers, underscoring a broader belief that forthcoming fiscal measures could ease financial pressures on telecom operators.

Budget hopes drive sector-wide optimism

According to a recent Budget 2026 preview by Axis Securities, the telecom industry is seeking relief on several regulatory levies. Key demands include a reduction or exemption of goods and services tax on license fees and spectrum usage charges, with proposals suggesting a cut from the current 18% to as low as 5%.

The note also highlighted industry expectations for greater flexibility in using input tax credit to offset liabilities arising from the reverse charge mechanism. Such a move, analysts believe, could help operators conserve cash and redirect funds toward expanding and upgrading network infrastructure. Continued government backing for next-generation technologies, including extended production-linked incentive schemes to support 5G rollout and early 6G readiness, is also anticipated.

Industry bodies seek lower regulatory levies

The Cellular Operators Association of India has renewed its call for a reduction in license fees, proposing a cut from the current 3% of adjusted gross revenue to a range of 0.5% to 1%. These expectations have contributed to sustained buying interest in Vodafone Idea, with the stock recording its third straight session of gains. Over the past three trading days, it has delivered returns of more than 9%, reflecting steady accumulation by investors.

Improved quarterly performance adds momentum

Beyond policy-related optimism, the company’s latest financial results have also supported the stock’s upward move. For the quarter ended December 2025, Vodafone Idea reported a narrower consolidated net loss of ₹5,286 crore, an improvement from ₹6,609 crore in the same period a year earlier. Management attributed the better performance to customer upgrades and a rise in average revenue per user.

ARPU increased 7.3% year-on-year to ₹186, compared with ₹173 in the previous year. Revenue from operations remained broadly stable at ₹11,323 crore, slightly higher than ₹11,117 crore reported a year earlier, indicating signs of operational stabilisation despite ongoing competitive pressures.

Subscriber trends show mixed picture

While the overall subscriber base declined by 3.4% year-on-year to 19.29 crore, the company reported growth in higher-value segments. The postpaid user base expanded 14.2% to 2.88 crore, suggesting improved traction among premium customers. Meanwhile, the combined 4G and 5G subscriber base rose to 12.85 crore from 12.6 crore a year ago, reflecting gradual progress in network adoption.

These trends have been closely watched by investors as indicators of the company’s ability to arrest long-term subscriber losses and improve revenue quality.

Government relief and funding support

During the quarter, Vodafone Idea received regulatory relief that resulted in its adjusted gross revenue liability being frozen at ₹87,695 crore, subject to reassessment. The company also strengthened its liquidity position by raising ₹3,300 crore through debt bonds issued by a subsidiary. The proceeds are earmarked for capital expenditure and further network expansion.

Capital expenditure plan targets revival

Vodafone Idea has outlined a ₹45,000 crore capital expenditure programme spread over the next three years, aimed at reviving its competitive position. Nearly 70% of this investment is planned for radio and tower infrastructure. As part of the strategy, the operator intends to add 40,000 to 45,000 unique towers over the next two years, building on the nearly 20,000 towers added in the past 18 months.

Focus on regaining competitiveness

With the long-standing AGR issue largely addressed and expectations of a more supportive policy environment, the company has laid out a three-year roadmap to narrow the gap with larger rivals such as Reliance Jio and Bharti Airtel. Reflecting improved investor confidence, Vodafone Idea shares have risen about 61% over the past six months, delivering notable gains to shareholders.