Vodafone Idea

Large subscriber base.

Extensive telecommunication network.

Existing network built on 5G-ready architecture.

Large enterprise customer base with longstanding relationships.

Extensive distribution and service network.

Trusted brand with strong proposition.

Strong promoter support.

Experienced management team.

The audit and review reports of the statutory auditors of the Company contain a paragraph on material uncertainty relating to going concern. There can be no assurance that any similar observations or remarks will not form part of the financial statements of the Company, or that such remarks will not affect its financial condition.

If the company does not continue to provide telecommunications or related services that are technologically up to date or keep up with changing consumer preferences, its may not remain competitive, and the company`s business, prospects, results of operations and cash flows may be adversely affected.

The company requires significant capital to fund its capital expenditure and working capital requirements and if the company is unable to raise additional capital, its business, results of operations, financial condition and cash flows could be adversely affected.

The Company has incurred significant indebtedness and has not complied with certain covenants under its financing agreements. Its inability to meet the company obligations, including financial and other covenants, under its debt financing arrangements could adversely affect its business, results of operations, financial condition and cash flows.

Its telecommunication licenses and spectrum allocations are subject to terms and conditions, ongoing review and varying interpretations, each of which may result in modification, suspension, early termination, expiry on completion of the term or additional payments.

Non-payment of large dues to its vendors, especially tower vendors and equipment suppliers, could have an adverse effect on its business and operations. As at December 31, 2023 and December 31, 2022 and as at March 31, 2023, March 31, 2022 and March 31, 2021, the company had trade payables aggregating to Rs.138,078 million, Rs.148,274 million, Rs.136,422 million, Rs.132,551 million and Rs.134,025 million, respectively, payables for capital expenditure aggregating to Rs.69,262 million, Rs.63,838 million, Rs.66,052 million, Rs.67,793 million and Rs.84,224 million, and lease liabilities aggregating to Rs.367,121 million, Rs.385,207 million, Rs.361,800 million, Rs.228,434 million and Rs.214,099 million, respectively.

The company faces intense competition that may have an impact on its market share and profitability.

There are outstanding legal proceedings involving the Company, and certain Subsidiaries, Promoters, Directors and Group Companies. Any adverse outcome in any of these proceedings may adversely affect its reputation, business, operations, financial condition and results of operations.

Its Statutory Auditors have included certain qualifications or adverse remarks in the annexure to their Auditor`s reports on the consolidated financial statements for the Financial Years 2023 and 2022 issued under the Companies (Auditor`s Report) Order, 2020. If similar comments are included in the Statutory Auditors` reports or their annexures for its financial statements in the future, the trading price of the company Equity Shares may be adversely affected.

Aditya Birla Idea Payments Bank Limited, a Group Company and Associate of the Company, is currently under liquidation. The company cannot assure you that such liquidation proceedings will be concluded in a timely manner. All disclosures pertaining to Aditya Birla Idea Payments Bank Limited in the Red Herring Prospectus are based on publicly available information only.

Under the implementation agreement entered into among the Company and the promoters of Vodafone India, among others, at the time of the Merger, there is a mechanism for settlement of liabilities relating to tax, regulatory and certain specified miscellaneous matters which existed as of a specified date prior to completion of the Merger. Any inability to fulfil its obligations in respect of AGR dues by June 2025 could impact the company ability to receive payments from the Vodafone Group under such settlement mechanism provided in the Implementation Agreement.

The company has incurred losses during recent periods and its may not achieve or sustain profitability in the future. During the nine months ended December 31, 2023 and December 31, 2022 and the Financial Years 2023, 2022 and 2021, its loss after tax was Rs.235,638 million, ?231,870 million, Rs.293,011 million, Rs.282,454 million and Rs.442,331 million, respectively.

Any further downgrade in its credit ratings could increase the company borrowing costs, affect its ability to obtain financing, and adversely affect its business, results of operations and financial condition.

The company has derived its revenues primarily from providing mobility services and the company has been dependent on the service areas of Maharashtra, Gujarat and Mumbai for a significant proportion of its revenues. As per the gross revenues reported in TRAI`s financial data reports, the contribution of the service areas of Maharashtra, Gujarat and Mumbai for the nine months ended December 31, 2023 and December 31, 2022 and the Financial Years 2023, 2022 and 2021 was 29.3%, 28.5%, 28.6%, 27.8% and 27.0%, respectively.

Churn in the mobile telecommunications industry in India is high and the company cannot assure you that its will be able to retain all the company existing subscribers or that the company will be successful in subscriber additions, which may have an adverse effect on its business and results of operations.

The Supreme Court of India passed a judgment granting 10 years to the Company and other Telecom Service Providers for payment of the AGR dues in yearly instalments. Any inability of the Company to make timely payment of the AGR dues as per the directions of the Supreme Court of India, could adversely affect its business and results of operations and could impact its ability to remain competitive.

The company is dependent on third party telecommunication providers and any deficiency in their services could adversely affect its business and results of operations.

Its ability to grow the company`s business and the company`s number of subscribers is dependent on the quality and quantity of spectrum owned by it.

The company is dependent on a limited number of vendors (including equipment manufacturers), and key suppliers to supply critical network and other equipment and services.

The company intend to utilise a portion of the Net Proceeds for funding the purchase of certain equipment which is subject to cost escalation. The company is yet to place orders for purchase of such equipment and there can be no assurance that its will be able to place orders for such equipment and machinery, in a timely manner or at all.

The company relies on sophisticated billing, credit control and customer verification systems, any failure of which could lead to a loss of income and subscribers.

The company is dependent on the services of its Key Managerial Personnel and other members of the management team and its ability to recruit and retain employees. The loss of or its inability to attract or retain such persons could adversely affect its business, results of operations and financial condition.

Its business depends on the delivery of an adequate and uninterrupted supply of electrical power and fuel at a reasonable cost.

Its reputation may be adversely affected by any negative publicity or market perception regarding its operations, which may have an adverse effect on the company`s business, results of its operations, cash flows and financial condition.

The company has only limited protection for its intellectual property.

A large part of its passive infrastructure is not owned by it and as a result the company cannot assure you that such passive infrastructure will be adequately maintained or that its strategy for the continued upgrade or rollout of the company network will be implemented in a timely manner or on a cost-effective basis.

The company is exposed to certain risks in respect of the development, expansion and maintenance of its mobile telecommunications networks.

If the company is unable to acquire new broadband subscribers or convert its existing subscribers to broadband subscribers, the company business, financial condition, results of operations and prospects may be adversely affected.

Its reputation and business may be harmed and the company may be subject to legal claims and negative publicity if there is loss, disclosure or misappropriation of, or access to its subscribers` or its own information or other breaches of the company information security.

The company is subject to extensive regulation and changes in laws, regulations, policies and the interpretation thereof. Failure to comply with existing or future laws, regulations or policies could have an adverse effect on its business, results of operation, financial condition and prospects.

Environmental and health regulations may impose additional costs and may affect its business, financial condition and results of operations. Concerns about health risks associated with mobile telecommunications equipment may reduce the demand for its services.

Its operations could be adversely affected by strikes, work stoppages or increased wage demands by the company`s employees or any other kind of disputes with its employees.

Its insurance coverage may not adequately protect the company against risks including operating hazards and natural disasters.

The company enter into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest with its shareholders.

Its Promoters exercise significant control over the Company and will continue to do so after completion of the Offer. Further, the Government of India holds a significant stake in the Company. This may limit your ability to influence the outcome of matters submitted for approval of its Shareholders.

Its Promoters, Directors and Key Managerial Personnel have interests in the company other than reimbursement of expenses incurred or normal remuneration or benefits.

Its ability to pay dividends in the future will depends on the company earnings, financial condition, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements.

As of December 31, 2023, the company had contingent liabilities as per Ind AS 37, which when they materialize, could adversely affect its business, financial condition and results of operations.

The company may be affected by competition laws, the adverse application or interpretation of which could adversely affect its business.

Its funding requirements have not been appraised by a bank or a financial institution and if there are any delays or cost overruns, its business, cash flows, financial condition and results of operations may be adversely affected.

Any variation in the utilization of the Net Proceeds as disclosed in this Red Herring Prospectus shall be subject to certain compliance requirements, including prior approval of the shareholders of the Company.

Its ability to raise foreign capital may be constrained by Indian law.

Under Indian law, foreign investors are subject to investment restrictions that limit its ability to attract foreign investors, which may adversely affect the trading price of the Equity Shares.

Any future issuance of Equity Shares, or convertible securities or other equity-linked securities by it or conversion of outstanding dues owed to the Government of India may dilute your shareholding and adversely affect the trading price of the Equity Shares.

Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

Significant differences exist between Ind AS and other accounting principles, such as Indian Generally Accepted Accounting Principles, U.S. Generally Accepted Accounting Principles and International Financial Reporting Standards, which may be material to investors` assessments of its financial condition.

Fluctuation in the exchange rate between the Indian Rupee and foreign currencies may have an adverse effect on the value of its Equity Shares, independent of the company operating results.