Beyond that, investors looking for triggers for the stock, based on third-quarter results or its management commentary, may be in for some disappointment. Despite government relief (moratorium on adjusted gross revenue, or AGR, and spectrum usage rights of up to four years), the telecommunications company’s liquidity problems are far from resolved. VIL continues to be in the red, with reported net loss widening to ₹7,231 crores in Q3FY22 from ₹7,132 crore in Q2FY22.

During its post-Q3 earnings conference call with analysts, management did not share any concrete details on its capital expenditure plans or the timing of the next fundraising. He said he hoped to revive his investment plans on the back of higher cash flow via tariff hikes and interest savings thanks to the government’s reform package.

On January 10, the VIL Board of Directors approved the initial conversion of interest resulting from the deferral of spectrum installments and AGR contributions into equity. “The NPV (net present value) of this interest is expected to be around Rs 16,000 crore according to our best estimate, subject to confirmation by the DoT (Department of Telecommunications),” the company said in a press release.

Analysts say at a time when rivals Reliance Jio and Bharti Airtel are investing full steam in network expansion, VIL’s falling investment is a drag on sentiment. In Q3, VIL’s investments amounted to ₹1,050 crore opposite ₹1,300 crores in the second quarter. “VIL’s 9 million investments in ₹3,300 crore is less than India’s Bharti wireless capex of ₹4,600 crores in the second quarter,” Nomura analysts said in a January 24 note.

“On the call, management did not provide any clarity on the investments, which was rather expected because with liquidity issues, they don’t have much leeway like their peers to plan aggressive investments. “We expect VIL’s investment to languish at current levels. Management has said it will be able to share an investment plan in Q4FY22, so until then investors are in a wait-and-see mode.” said an analyst, on condition of anonymity.

Meanwhile, VIL’s overall subscriber base fell to 247.2 million from 253 million in the second quarter due to SIM card consolidation. Minutes and data usage also decreased. There was a marginal increase of 0.8 million customers in the key 4G segment in the third quarter.

At the end of Q3, VIL’s net debt amounted to ₹1.975 trillion. With further approval by its Board of Directors for the initial conversion of the full amount of interest resulting from the deferral of spectrum installments and AGR equity contributions, VIL aspires to prioritize increasing its 4G coverage to match to its 2G coverage.

The capital conversion will lead the government to become the main shareholder of VIL with a 35.8% stake. While this may help the company survive in the future, its ability to compete effectively remains to be seen.

Thus, investors can expect the full impact of recent price increases to be seen in the current quarter (Q4). Needless to say, investors could watch the near-term earnings trajectory closely. In addition, significant fundraising remains essential.

“Without significant fundraising, we believe that investment in VIL’s network and 5G rollout would remain limited, at least in the short term, leading to further market share erosion,” Nomura analysts said.

Shares of VIL ended down 7.6% on Monday compared to the 2.7% decline in the Nifty50 index. With that, the stock is down around 35% from its 52-week highs seen on Dec. 13 on NSE.