IDEA - VODAFONE IDEA LIMITED Share Price

The management of Vodafone Idea Limited (Vi) provided a positive outlook during the Q1 FY'26 earnings call. Key highlights include a focus on network expansion and strategic initiatives aimed at improving subscriber metrics.

For Q1 FY'26, the company reported revenues of Rs.110.2 billion, a 4.9% year-over-year increase, and cash EBITDA of Rs.21.8 billion, improving by 3.7% year-on-year. The total broadband site count reached approximately 516,200, with 4G population coverage increasing to around 84%, up from 77% in March 2024. The investments in capital expenditure totaled Rs.24.4 billion, underpinning a plan to boost capital expenditures to between Rs.500"“550 billion over the next three years, pending funding arrangements.

Management highlighted subscriber trends, noting a restricted loss of only 0.5 million in Q1, which is approximately 90% lower than the previous year's losses. They anticipate continued improvement in subscriber metrics, bolstered by the rollout of 5G services in 22 cities across 13 circles and plans for further expansions by September 2025. A strategic collaboration with AST SpaceMobile aims to extend coverage with satellite-based mobile broadband, enhancing reach in underserved regions.

For consumer engagement, management emphasized efforts like the Non-Stop Hero Plan providing unlimited data, along with attractive offerings for postpaid customers, resulting in a 14.9% year-over-year increase in Consumer ARPU, reaching Rs.177.

Overall, management expressed confidence in capitalizing on growth opportunities in the evolving digital economy and improving digital service offerings while maintaining a commitment to operational efficiency and customer satisfaction. The anticipated positive impact of 5G on both technology and subscriber experience was noted as a crucial forward-looking factor for enhancing revenue streams.

1. Question: "Have the customers who had gone to BSNL returned to the network? How should we think about churn here on, given the population coverage expansion?"

Answer: It's difficult to determine if those customers have specifically returned. However, trends indicate that the subscriber migration to BSNL following the price increase has reversed. Our churn levels have consistently declined; from 5 million to 1.6 million, and now to 0.5 million. The increase in our population coverage to 84% has positively impacted subscriber metrics, and with ongoing enhancements, we expect further improvements.

2. Question: "With Capex of around INR 120 billion since FPO, how far will you go on Capex, considering the recent slippage?"

Answer: We plan to spend approximately INR 500"“550 billion on Capex, pending funding. There has been a delay primarily due to the 5G rollout. We expect to meet our target of INR 50"“60 billion for H1 by September '25. Post-September, our Capex will mainly rely on cash generation from operations while engaging banks for additional funding.

3. Question: "How much of your customer base has opted for 5G subscriptions and what barriers are there to adoption?"

Answer: While I cannot provide precise numbers on device adoption, we observe that 60%-70% of 5G device owners are actively using 5G once it's available. Some may prefer 4G due to potential battery drain or personal choice. Our current introductory pricing starts at INR 299 for the 1.5 GB per day plan, aimed at encouraging 5G usage.

4. Question: "Could you clarify why subscriber additions seem lagging compared to reductions in overall loss?"

Answer: I wouldn't classify it as a lag effect. Post-price increase, we lost 4G subscribers but recently added 1 million 4G subscribers despite an overall loss of 0.5 million. This trend indicates positive movement in 4G despite previous challenges. We expect to witness continual growth in 4G subscribers moving forward.

5. Question: "What are your thoughts on funding progress and any potential bottlenecks from banks?"

Answer: We are actively engaging with banks to secure funding, aided by recent credit rating upgrades. However, banks are seeking clarity on the AGR front. While discussions are progressing, we also explore non-banking sources for quicker funding to ensure continuity in our Capex, especially considering potential delays in bank funding.

6. Question: "What outstanding amounts do you currently hold for AGR and deferred spectrum liabilities?"

Answer: As of June, our outstanding deferred spectrum liability totals approximately INR 119,000 crores, while the AGR liability is around INR 76,000 crores, totaling about INR 195,000 crores.

7. Question: "Is there any feasibility for the company to repurchase shares, considering future cash flows?"

Answer: Technically, a company cannot repurchase its shares; it would require the promoters to buy back their stake. Our current focus is on investment and utilizing available capital for business growth rather than addressing the government stake right now.

These responses provide insights into Vodafone Idea's current challenges and potential future developments, along with relevant numbers and guidance.