Informist, Thursday, Nov. 14, 2024

By Arya S. Biju and Sunil Raghu

MUMBAI – Dubbing 2024-25 (Apr-Mar) as a "critical" year, the management of Vodafone Idea Ltd. Thursday said it hopes to stage a smart turnaround in the current financial year. The telecom service provider has kick-started its investment cycle and is deploying funds to upgrade fourth-generation coverage, adding capacity and rolling out fifth-generation services. The investment and its mega-deal with equipment suppliers are seen as key steps towards making the company more competitive, Akshaya Moondra, chief executive officer of Vodafone Idea said in a post-earnings conference call.

Vodafone Idea also sees consistent improvement in performance going forward on account of the investments, rollouts and the benefit of tariff hikes it took after two years. The company has plans for a capital expenditure of INR 80 billion in Oct-Mar and hopes to fund this through internal accruals. After the equity funding through the follow-on public offer and preferential issuance to one promoter group, the company has a cash and bank balance of INR 136.2 billion, the management said.

Tariff hikes effected in July supported the growth in the company's top line in the latest quarter, Vodafone said. However, the growth in revenue post the price hike was low due to subscriber loss. Vodafone Idea's 4G telecom service users fell to 125.9 million at the end of September quarter from 126.7 million a quarter ago. Asked when the depletion of subscribers will stop, Moondra said it is difficult to predict a timeline. However, he said he expects the customer loss trajectory to turn around by the end of the current financial year.

The full impact of the tariff hike in July on the average revenue per user and revenue of the company would take a couple of quarters to be visible, the company said. Moondra said another tariff rationalisation is needed for the industry to recover costs. There is no more room for tariff hikes at the entry level, it has to be carried out at the higher consumption level, Moondra said. The increasing 5G adoption is expected to provide opportunities to charge more in the higher consumption segment, the company said.

Vodafone Idea said it may see conversion of debt to equity by the government as the moratorium on payment of its regulatory dues expires in the next 12 months. For the past few years, the company has been surviving on external cash infusion and a four-year moratorium on regulatory dues. After the moratorium ends in September 2025, the company will have to pay INR 413 billion annually until it pays off its dues.

On the Supreme Court rejecting the curative petitions filed by Bharti Airtel Ltd. and Vodafone Idea against calculation of adjusted gross revenue, Moondra said the rejection was based on a technicality. As the court has dismissed the petition, the company is engaging with the government, the management said. The company is hopeful that the government will remain committed to having a competitive telecom industry and will provide support to telecom companies.

Vodafone Idea reported lower-than-expected earnings for the September quarter post market hours Wednesday. The telecom service provider reported a consolidated net loss of INR 71.76 billion for the September quarter on revenue of INR 109.3 billion. The company's average revenue per user on a blended basis was INR 156 for the quarter. On Thursday, shares of the company closed at INR 7.34 on the National Stock Exchange, down 0.3% from the previous close. End

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.