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[puneettalks]

This is my reply to an analyst who wanted me to sell VI shares. This reply will be a little lengthy so kindly bear with me. Telecom is high capex business we all know so debt 1.5 lac crore + is common for all operators. Same balance sheet also have assets worth 2lac crore + . You also know there are 100 ways to present the same balance sheet so let me highlight few points here on debt side idea has nearly 16000 cr of income tax and gst refunds pending which can’t be part of debt also there are committed receivables of 6600 cr from parent Voda PLC on ground of contingency payment again can’t be shown in balance sheet. Then in agr case idea has submitted detailed data of 5925 cr of arithmetic errors in principle demand which along with interest and penalties is 4 times of this which will eventually will be reversed today or tomorrow either by SC or some international court as charging twice is against the basic principle principle f justice. In recent reforms 1.0 BG on spectrum and other dues likely to be removed as per reports this will reduce idea BG/debt by 14000 cr ( more details awaited ) all this put together brings effective debt of idea at 1.4 lac-1.5 lac crore range. Now let’s come to other aspect of BS which is assets and depreciation RIL claims they have invested capex of 3.5lac crore + to built Jio, idea balance sheets says their assets are at 2lac crore yet the depreciation for Jio is 12000 cr per annum and for idea it’s 25k cr. What kind of non depreciating assets Jio has built in this highly technology dependent industry? Jio debt is reported to be around 1.5 lac crore then 2lac crore must have been equity so what kind ROI is required for such huge equity. Anyways now come to valuations. With 4 years of moratorium question of idea survival is settled so we will take valuations in current scenario as well as future scenario in current case since net worth is negative and cash flows are minimal so we have to do valuations in terms of intrinsic value. Jio took investment of 3.5lac crore and 10 years to built what it’s today EV of Jio is at 6lac crore and bharti airtel is 5.5 lac crore so in that case bare minimum EV of idea comes out at 2.5 lac crore with actual debt at 1.5 lac this makes current value at 34/- a share. With no room for any operator to enter this is a steal deal for anyone to buy and current promoters knows it fully. Now let’s come to future potential let’s assume Vi remains a distant 3rd even after 5G and 4G capex deployment. Still on October 2025 when moratorium will end Vi is likely to have 3 crore 5G users @ 600 arpu. At least 18 crore(already at 12.5 cr and adding every month) 4G users @ 350/- arpu and aprox 7 cr 2G users at 150 arpu annual revenue comes out 110000 crore. Ebitda even on current margins will be 50k crore + so you can very well decide what will be valuations in future. I can understand and dilemma that at what valuations promoters will infuse funds as last time when cmp was 19 they brought rights issue at 12 but I am 100% sure it will be other way around this time logics are one promoters apart from their own funds needs to raise huge funds from external sources so very thin chance they will undersell their company and secondly last time when rights issue was done industry was in turmoil and future was uncertain so it’s justified to have conservative valuations but now for next 5 years telecom is the next sunshine so in any case of current promoters don’t know the value of their diamond ( unlikely assumption) someone else will sure value it like Kohinoor. Rajiv ji, it’s so nice that you replied to my tweet but would request you to kindly go thru whole thread and correct where all I am wrong and hopefully you will change your view on this stock…