Vi narrows losses by 18% amid modest subscriber growth

Vodafone Idea (Vi) reported a consolidated net loss of ₹6,432 crore in Q1 FY25, reflecting an 18% contraction from ₹7,840 crore in the same quarter last year. This was driven by a modest 3% year-on-year growth in its 4G subscriber base, which increased to 12.67 crore last quarter from 12.29 crore in Q1 FY24, according to the company's quarterly results filing.

Revenue from operations saw a 1.4% decline, dropping to ₹10,508 crore for the quarter ended June 30, 2024, down from ₹10,655 crore in the year-ago quarter. Despite a significant drop in revenues from services and the sale of goods, the company's total income grew nearly 1%, rising from ₹10,676 crore to ₹10,765 crore, driven by a twelve-fold increase in income from other sources.

The company cut its total expenses by 7%, lowering them from ₹18,513 crore to ₹17,191 crore. This reduction was primarily driven by substantial cuts in network and IT outsourcing costs, license fees, spectrum usage charges, and marketing expenses. The company also reported a capex spend of ₹760 crore for the quarter.

The improved performance this quarter is largely due to recent fundraisings, increased tariff rates, and a modest growth in subscriber base.

“Post the recent equity raise, we are in the process of expanding our 4G coverage and capacity as well as the launch of 5G services, basis which we expect a 15% increase in our data capacity and an increase in 4G population coverage by ~16 million by end Sep’24,” says Akshaya Moondra, CEO of Vodafone Idea.

This quarter, the debt-laden telecom raised nearly ₹24,000 crore in equity funding. This included ₹18,000 crore through an FPO in April, ₹2,080 crore via a preferential issue to an ABG (promoter) entity in May, ₹2,460 crore through a preferential issue to Nokia and Ericsson in July, and ₹1,600 crore through the conversion of OCDs between March and July.

“We are engaged with our lenders for tying up debt funding towards the execution of our network expansion with a planned capex of ₹500 to 550 billion (₹50,000-55,000 crore) over the next 3 years,” revealed Moondra

Following the issues, the promoters now hold a 37.2% stake, while the Government of India's shareholding stands at 23.1%.

The telecom provider's average revenue per user (ARPU) increased by 4.5% to ₹146, up from ₹139 in the same quarter last year.

“The recent tariff intervention is a step in the right direction for the industry to move towards better return on investment, as also to improve cash generation to support the large investment requirements. However, further tariff rationalisation is needed for the industry to fully cover its cost of capital,” said Moondra.

As of June 2024, the company's debt from banks and financial institutions nearly halved to ₹4,650 crore from ₹9,200 crore in the same quarter last year, with optionally convertible debentures at ₹160 crore. The company's cash and bank balance stood at ₹18,150 crore, while its payment obligations to the government amounted to ₹2.09 lakh crore, including deferred spectrum payments of ₹1.39 lakh crore and AGR liabilities of ₹70,320 crore. The company's quarterly EBITDA increased by 4.2% year-on-year to ₹2,100 crore.

The company’s shares opened at ₹16.19 on the NSE today but, have since fallen 0.81% to ₹15.88.