Earnings Outlook
Vodafone Idea to post loss, but higher ARPU to aid revenue
This story was originally published at 20:04 IST on 10 February 2025
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By Arya S. Biju
MUMBAI – Vodafone Idea Ltd.'s consolidated net loss is expected to widen in the December quarter due to a continued decline in its subscriber base. The company's top line and margin, on the other hand, are expected to grow sequentially, driven by an uptick in tariff hike-led average revenue per user. The company is also likely to have benefitted from the ongoing migration of users from second-generation to fourth-generation technology, analysts said.
The company is expected to post a consolidated net loss of INR 72.21 billion for the quarter, according to the average of the estimates of five brokerages. This is higher than the net loss of INR 71.76 billion reported in the previous quarter and INR 69.86 billion reported in the year-ago quarter. Estimates for the net loss range from INR 66.97 billion by Kotak Institutional Equities to INR 81.87 billion by Nuvama Wealth Management Ltd.
Analysts expect the company's consolidated revenue to rise 3% sequentially to INR 112.47 billion. On a year-on-year basis, the consolidated revenue is expected to rise 5.4% from INR 106.73 billion. Centrum Broking Ltd. has the highest estimate of INR 112.07 billion for the company's top line, while Nuvama has the lowest estimate of INR 110.89 billion.
The telecommunications company is likely to have lost around 4 million customers in the quarter, Centrum Broking and JM Financial Institutional Securities Pvt. Ltd. said in their earnings previews. This is expected to be driven by a drop-off in the lower-revenue segment, JM Financial said. According to data from the Telecom Regulatory Authority of India, the company lost 1.50 million subscribers in November and 1.98 million subscribers in October. JM Financial expects the company to report a mobile broadband subscriber loss of around 1.5 million.
Analysts expect Vodafone Idea's average revenue per user to improve sequentially in the range of 4.8% to 6% in the quarter on continued pass-through of the tariff hike it took in July and an improved subscriber mix. JM Financial and Centrum Broking expect the company's average revenue per user to rise around 5% on quarter to INR 164 per month, while Motilal Oswal expects it to rise 6% sequentially to INR 165 per month. In the September quarter earnings conference call, the company said it would take a couple of quarters for the full impact of the July tariff hike to be visible.
The company's earnings before interest, tax, depreciation and amortisation is seen rising 3.7% sequentially to INR 47.2 billion for the December quarter, on higher average revenue per user, analysts said. Motilal Oswal expects the company to increase its capital expenditure for the quarter to INR 28 billion from INR 13.6 billion in the previous quarter.
The company will announce its December quarter earnings on Tuesday. Investors are expected to watch out for the management's commentary on ongoing capital expenditure, Centrum Broking said. Nuvama expects investors to look out for the management's commentary on network expansion plans, progress in the rollout of fifth-generation technology, and measures to control subscriber loss.
Of the five brokerage reports available on the company with Informist, one has a 'buy' rating on the stock, one has a 'sell' rating and three have a 'hold' or equivalent rating. On Monday, shares of the company ended at INR 9.11 on the National Stock Exchange, down 3.8%. The stock has risen around 24% since the announcement of its Jul-Sept earnings post market hours on Nov. 13.
Following are the Oct-Dec earnings estimates for Vodafone Idea based on reports from five brokerage firms in descending order of net loss estimate (in INR million):
Brokerage firm | Net sales | Net loss | EBITDA |
Nuvama Wealth Management Ltd. | 110,885.00 | 81,873.00 | 46,511.00 |
Centrum Broking Ltd. | 112,065.00 | 71,286.00 | 46,109.00 |
Motilal Oswal Financial Services Ltd. | 112,830.00 | 70,536.00 | 47,360.00 |
JM Financial Institutional Securities Pvt. Ltd. | 111,789.00 | 70,407.00 | 47,198.00 |
Kotak Institutional Equities | 114,782.00 | 66,969.00 | 48,846.00 |
Average | 112,470.20 | 72,214.20 | 47,204.80 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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