Nearly half or Rs 10,579 crore of the Rs 21,218 crore to be paid out in 2018-19 is Vodafone Idea’s share. In comparison, Bharti Airtel’s annual outgo is smaller at Rs 5,573 crore.

Indeed, 79% of Vodafone Idea’s net debt of Rs 1.13 lakh crore, is spectrum related and owed to the department of telecommunications.

The spectrum payments will leave VIL’s debt elevated for several years, at least till 2023-24, given how tariffs — both for data and voice — are expected to remain low. The cumulative Ebitda (earnings before interest, taxes depreciation and amortisation) is estimated at Rs 42,700 crore till 2021-22.

Analysts at Kotak Institutional Equities (KIE) estimate a funding gap of Rs 38,000 crore, should VIL spend a cumulative Rs 50,000 crore on capex by 2020-22 and incur a cash interest cost of Rs 31,000 crore.

The VIL management plans an equity infusion is Rs 25, 000 crore, 75% of it will come from the promoters. The pickings from the sale of the 11% stake in Indus Towers should be around Rs 5,000 crore which together with the monetisation of the fibre would just about be enough to meet estimated funding gap between 2HFY19-FY2022.

VIL hopes to advance the benefits from synergies by two years and save `14,000 crore.

KIE estimates a net debt of Rs 1.2 lakh crore at the end of FY2022 post an equity raise of `25,000 crore and asset sale proceeds of Rs 13,000 crore from Indus stake sale and fibre monetisation.

However, analysts at Jefferies noted that despite the fund raise, synergies and the stake sale in Indus, the company’s debt to Ebitda ratio could be a high 19 times in FY20. Peer Bharti Airtel’s net-debt-to-Ebitda at the end of the September quarter was 4.65 times.

“We expect Vodafone Idea to be number three player by early FY20 and continue losing market share over next two years. Consequently, our FY19-21 Ebitda falls 34-13%,” the analysts wrote. According to analysts at JP Morgan, “Vodafone Idea does not appear to be in a position to fund even basic capex, given the burdensome leverage.” Even if the entire Rs25,000 crore is used to service debt, the company will be left with a debt of Rs 92,000 crore, taking into account interest cost, by the end of the current financial year, they noted.

Much depends on how much pricing power players like VIL and Bharti Airtel will be able to command given Reliance Jio’s onslaught. The VIL management believes the current pricing levels are unsustainable. However, analysts are disappointed the telco does not acknowledge the possibility of a further deterioration in the pricing environment. VIL hasn’t spelt out what it would do if pricing worsens or what it could do to prevent such a situation.

According to JP Morgan, the competition intensity would depend on “RJio’s pricing stance which does not need to turn constructive, given Rjio’s strong, sustained subscriber addition and top-line growth”.

On November 8, Moody’s Investors Service placed on review for downgrade the Baa3 issuer and senior unsecured rating of Bharti Airtel.