Vodafone Idea Q2 FY25 Earnings: Losses Narrow to ₹7,175 Crore, ARPU Rises to ₹156 with 4G Expansion

Vodafone Idea Ltd reported a reduced net loss of ₹7,175 crore in the September quarter, a decrease from ₹8,746 crore in the same period last year. This improvement was supported by a slight revenue increase to ₹10,932 crore from ₹10,716 crore. However, the telecom company continues to advocate for further tariff adjustments across the industry to help cover rising capital costs.

Rise in ARPU Driven by Tariff Hikes

Vodafone Idea’s average revenue per user (ARPU)—a crucial metric for profitability—climbed to ₹156 from ₹142 a year ago and ₹146 in the previous quarter. This growth was largely due to the impact of tariff hikes implemented in June. The increase in ARPU reflects a broader trend across India’s telecom sector, where all major operators are benefiting from recent price adjustments of 10–21%. Larger competitors like Reliance Jio and Bharti Airtel raised entry-level 5G prices by over 45%, while Vodafone Idea focused on gains from 4G rate increases.

Decline in Subscriber Base Due to SIM Consolidation

Vodafone Idea’s total subscriber base decreased to 205 million from 219.8 million a year ago, mainly due to SIM consolidation following the tariff hikes. The company’s 4G user base now stands at 126 million.

CEO Advocates for Industry-Wide Tariff Increases

CEO Akshaya Moondra stated that recent tariff increases have started to improve ARPU and revenue, though the full benefits will take a few more quarters to materialise. He also supported further tariff rationalisation across the industry to enable better returns on capital, a position echoed by Vodafone Idea’s rivals.

Funding Efforts and Network Expansion Plans

Vodafone Idea, backed by the Aditya Birla Group, is in talks with lenders to raise ₹35,000 crore in debt to support network expansion, with planned capital expenditures of ₹500-550 billion over the next three years. Recent improvements have included a 14% boost in 4G data capacity, expanded coverage for an additional 22 million people, and an 18% increase in 4G speeds.

Strategic Partnerships for Network Equipment

The company has secured $3.6 billion in long-term contracts with Nokia, Ericsson, and Samsung for equipment supply over the next 3 years. Nokia announced that it will add 3,300 new sites and upgrade over 42,000 existing sites by March 2025. Vodafone Idea has already completed 25,000 spectrum expansions, enhancing network capacity.

Capital for 4G Expansion and 5G Rollout

Earlier this year, Vodafone Idea raised ₹24,500 crore through a follow-on public offer (FPO), part of which included issuing equity to vendors like Nokia and Ericsson to settle dues and issuing shares to the promoter group. This capital is earmarked for expanding 4G services in 17 priority circles, launching 5G in key cities, and broader capacity upgrades. The company aims to introduce 5G services in Delhi and Mumbai by December, with a target of 15,000 sites by March 2025.

Financial Performance and Network Investments

Vodafone Idea’s earnings before interest, tax, depreciation, and amortisation (EBITDA) rose to ₹4,550 crore, with a margin of 41.6%. Despite substantial network agreements, capex spending for the quarter was ₹1,360 crore, the lowest among peers.

Expanding 4G Coverage and Phasing Out 3G Services

Vodafone Idea added 42,000 new 4G sites in the quarter, marking its largest-ever expansion. It also deployed 4G services on the 900 MHz band across 20,500 sites, improving indoor coverage and capacity. The company has reduced its 3G coverage significantly, shutting down 19,700 3G sites and leaving only eight circles with active 3G services as of September. Vodafone Idea plans to phase out 3G by April next year fully.

On November 14, 2024, Vodafone Idea share price opened at ₹7.40, touching the day’s high of ₹7.62, reflecting a rise of 2.04% as of 10:49 AM on NSE.

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