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The most crucial element for Vodafone Idea's long-term sustainability is its stability as a telecom service provider. The telco cannot achieve healthy returns unless it maximises revenue from each of its customers. Vodafone Idea, India's third-largest telecom operator, must raise tariffs further to ensure a healthy ARPU (average revenue per user). Although the telco can certainly enhance ARPU without raising tariffs, this will not happen soon enough for the company to compete with Airtel and Jio. However, tariffs are not the root cause of the company’s struggles, it is the slow addition of 4G users. After the tariff increase in July 2024, not only did Vi lose mobile users, but its rate of adding 4G users also slowed down.
On 11 February 2025, Vodafone Idea (Vi) reported a net loss of Rs 6,609 crore for the quarter ending 31 December 2024, compared to Rs 6,985.9 crore for the same period the previous year. The operating revenue of India's third-largest telecom provider increased from Rs 10,673 crore in Q3 FY24 to Rs 11,117 crore in Q3 FY25.
Subscribers and ARPU
By the end of 2024, Vi had a total of 199.8 million subscribers, with an ARPU of Rs 163. The company reported that it is on track to meet its 4G population coverage target of 1.1 billion by March 2025 and plans to increase this further to 1.2 billion, covering approximately 90 per cent of the population. By the end of December 2024, Vi claimed to have increased its 4G population coverage by about 41 million, reaching 1.07 billion, compared to 1.03 billion in March 2024.
Vi will be able to increase its ARPU without raising tariffs as more people transition to 4G. However, as noted earlier, this will not be enough. To reach the Rs 200–210 level, the telco will need another round of price hikes. Vi’s mobile business ARPU stood at Rs 173 in Q3 FY25. For comparison, Airtel’s ARPU was Rs 245, while Jio’s stood at Rs 203.3.
4G user addition
In a single year, the telco only added 400,000 4G subscribers, according to Vi's data. Its 4G subscriber base grew from 125.6 million to 126 million between Q3 FY24 and Q3 FY25. The telco’s performance in the 4G subscriber category is poor. Vi is working to address this issue by expanding 4G connectivity across India. Following a significant stock raise in 2024, the company has substantially increased its capital expenditure.
Another round of tariff resets can be expected due to the unified market structure in the Indian telecom sector, rising data consumption, one of the lowest ARPUs in the world, and insufficient returns for telecom operators.
To close the network gap with its competitors, Vodafone Idea is embarking on a major capital expenditure cycle over the next two to three years. However, increased debt and additional government support are likely prerequisites for Vodafone Idea’s capital expenditure plans.
A proposal to allow telecom operators to return excess spectrum acquired through auctions before 2022 is reportedly being considered by the central government. As noted earlier, one of the most crucial elements for Vodafone Idea's long-term sustainability is its stability as a telecom service provider. If implemented, the plan could provide Vodafone Idea with a significant financial boost by allowing it to return unused airwaves and save up to Rs 40,000 crore. A government ruling in December exempted the debt-ridden company from offering bank guarantees for spectrum purchased before 2021.
In March 2025, the telco plans to roll out 5G and launch commercial 5G services in Mumbai, with additional cities to follow in April 2025.