Vodafone Idea

The Indian wireless broadband subscriber base grew by approximately 45 million between November 2023 and November 2024, reflecting a 5% growth, yet overall broadband penetration remains below 65%. Private mobile operators implemented a tariff hike in July 2024, which improved ARPU and revenue, but the industry's ROCE remains low. Management emphasized the necessity of further tariff increases, suggesting a potential timeline of 9-12 months, or even faster, to recover the cost of capital and sustain future growth. They advocate for a pricing model where heavy data users contribute more for higher usage, while maintaining affordability for basic users.

Vodafone Idea significantly increased its Capex, investing ₹32.1 billion in Q3 FY25, bringing the total for the first nine months of FY25 to ₹53.3 billion, with a full-year target of ₹100 billion. The company added over 4,000 unique broadband towers and deployed 4G on the 900 MHz band across approximately 15,000 sites, enhancing coverage and indoor network experience. 4G population coverage expanded by 41 million, reaching 1.07 billion by December 2024, with a target of 1.1 billion by March 2025 and an ultimate goal of 1.2 billion (~90% population coverage). These initial investments have resulted in positive VLR net adds in 11 circles in December and January.

The company confirmed that 5G rollout is underway, with Mumbai slated for launch in March 2025, followed by Delhi, Bangalore, Chandigarh, and Patna in April 2025. Management noted that site rollout is progressing and they are awaiting a certain threshold before commercial launch. While specific 5G user numbers were not disclosed, the company observed a constant increase in 5G devices on its network, anticipating faster growth post-launch. The goal is to deliver superior quality 5G services, similar to their recognized 4G network performance.

Vodafone Idea is transforming into a technology-driven enterprise, expanding beyond connectivity to offer advanced solutions like SD-WAN, IoT, and cloud services. They launched hyperlocal marketing campaigns to highlight network improvements and introduced new offerings like the Vi Movies & TV Super pack at ₹175, combining data benefits with access to 15+ OTT platforms. The Vi App is being enhanced with features like UPI autopay and recharge options even with zero daily data, aiming to drive digital engagement and monetization. The company also launched an AI and ML-powered spam management solution to protect users from unsolicited messages.

For Q3 FY25, revenue stood at ₹111.2 billion (up 4.2% YoY), and EBITDA (excluding IndAS116) was ₹24.5 billion (up 15% YoY), with a 22% margin. Reported EBITDA (including IndAS116) was ₹47.1 billion (up 8.3% YoY), with a 42.4% margin. The company reported a PAT loss of ₹66.1 billion. Debt from banks reduced by ₹52.9 billion YoY to ₹23.3 billion by end-Q3 FY25, with cash and bank balances at ₹120.9 billion. Deferred payment obligations include AGR dues of approximately ₹700 billion and spectrum dues of approximately ₹1400 billion.

The Department of Telecommunication (DoT) extended support by waiving the Bank Guarantee requirement for spectrum auctions prior to 2021, which previously aggregated to ~₹247.5 billion. This move, along with the equity infusion of ₹260 billion in the last 10 months, has bolstered discussions with lenders. Management highlighted that the government, as the largest stakeholder, is cognizant of the need for solutions, including potential conversion of deferred payments (AGR and spectrum dues) into equity, though the final structure is still under discussion. The waiver of BGs has given confidence to the banks to move forward with debt funding discussions.