Vodafone Idea Ltd, India’s third-largest telecom operator, surprised with a better-than-expected performance on a decline in expenses, especially finance costs, in the September quarter.
However, its debt of over ₹2 trillion and repayments starting next year continue to weigh on its finances, making its survival dependent on government relief, according to analysts.
The telecom operator posted a net loss of ₹5,524 crore, lower than the year-ago loss of ₹7,176 crore and also Bloomberg’s estimate of a loss of ₹6,712 crore.
The lower losses can be attributed to a reduction in expenses, particularly finance costs, which include interest payments on debt and other liabilities, accounting for 43% of its revenue from operations.
The operator's losses narrowed from the previous quarter's ₹6,608 crore as the finance cost fell 18.8% quarter-on-quarter and nearly 28% year-on-year to ₹4,784 crore.
The company's bottom line may have also benefited partially from the lower debt resulting from the government's conversion of dues worth ₹36,950 crore into equity in April.
AGR relief brings hope
The company reported its quarterly results at a time when it continues to grapple with the issue of the adjusted gross revenue (AGR) dues. The Supreme Court last week clarified that the government could reassess and reconsider all of Vodafone Idea’s adjusted AGR dues as of 2016-17, including interest and penalties, delivering significant relief to the cash-strapped telecom company. Following this, Bharti Airtel Ltd is also in the process of seeking a waiver from the government on the AGR.
AGR is the income figure used to calculate the licence fees and spectrum charges that telecom companies must pay the government.
The government owns a 49% stake in Vodafone Idea. On the AGR matter, the company said: “We are in discussion with the DoT (for next steps on this matter.”
The company’s revenue from operations rose 2.4% on-year to ₹11,194.7 crore, just missing Bloomberg’s estimate of ₹11,136 crore. The improvement can be attributed to the company’s network expansion plans, increase in data consumption on the network and tariff hikes last year.
On a sequential basis, the company’s revenue rose 1.6% from ₹11,022.5 crore in the preceding quarter.
“We continue to make steady progress towards our strategic intent of delivering superior customer experience. We expanded our 4G coverage to over 84% of the population and completed the 5G rollout in all 17 circles where we hold 5G spectrum,” said Abhijit Kishore, Vodafone Idea chief executive, in a statement. “The growth of 21% in data volume reflects our ability to retain and engage customers through our differentiated prepaid and postpaid offerings.”
Kishore was appointed as the CEO of the company in August. The company remains engaged with lenders to secure debt financing to support its broader capex plans of ₹50,000-55,000 crore.
Subscribers and ARPU trends
As of September-end, the company’s subscriber base was at 196.7 million, down by 1 million sequentially.
In the second and third quarters of 2024-25, Vodafone Idea lost 5 million subscribers each. In the September quarter, the company’s 4G/5G subscriber base also improved to 127.8 million, as against 127.4 million in the preceding quarter.
The company’s average revenue per user (Arpu), a key performance metric, rose marginally to ₹167 from ₹165 in the preceding quarter. In comparison, Reliance Jio’s Arpu rose to ₹211.4 in the September quarter from ₹208.8 in the preceding quarter, whereas for Bharti Airtel, the Arpu was ₹256, up from ₹250 in the preceding quarter.
During the quarter, Vodafone Idea’s Ebitda came in at ₹4,685 crore, a marginal from from the preceding quarter of ₹4,612 crore, but rose 3% on-year owing to higher revenue growth.