Vodafone Idea Posts Positive 3QFY22 Results, Improves Revenue, ARPU

On Friday last week, Vodafone Idea announced its financial results for 3QFY22, in another quarter of growth for India's third-largest telco. The telco announced its results shortly before Reliance Jio posted its quarterly results.

Vodafone Idea Notches Up More Growth

Vi reported revenues worth ₹9,717.3 crores, up 3.3% from the last quarter's revenue of ₹9,406.4 crores. Along with this, the telco's EBITDA improved to ₹1,620 crores, compared to ₹1,410 crores in Q2FY22. The EBITDA margin also improved significantly, improving to 41.1% from 39.3% the quarter before. The telco managed to improve revenue and achieve higher savings on account of cost optimization exercise, which is partially offset by higher marketing expenses. Capex spending for Q3FY22 was ₹10.5 billion, down from ₹13.0 billion in Q2FY22.

While this is positive for the telco, the fact remains that it still is under immense debt. According to the latest results from the telco, the total gross debt stands at ₹1,989.8 billion. This includes deferred spectrum payment obligations of ₹1,113.0 billion, AGR liability of ₹646.2 billion that is due to the government, and debt from banks and financial institutions of ₹230.6 billion. Also, cash & cash equivalents were ₹15.0 billion and net debt stood at ₹1,974.8 billion. However, the telco has reason to stay positive, as it has gone for converting its debt to equity. The government will acquire a majority share in the telco, sure, but it will have enough liquidity to compete for 4G and the imminent 5G launch.

Ravinder Takkar, Vi's CEO, said, "while the overall subscriber base has declined as a result of the tariff interventions, the 4G subscriber base remained resilient on the back of superior data and voice experience offered by Vi GIGAnet. We remain focused on executing our strategy to improve our competitive position and win in the marketplace. Separately, we have opted for upfront conversion of interest arising from deferment of the spectrum and AGR dues into equity".

Positive Signs on the Telecom Side

Vodafone Idea noted that during the quarter, it added around 4,000 4G FDD sites, refarming the 2G/3G spectrum. The telco has been shutting down its 3G sites, as has been all the other telcos, and as such, the telco's total telecom sites reduces slightly.

The telco's ARPU, which remains the lowest among the three private players, has improved quite a bit over the last two quarters. Following Airtel's lead, the telco had also increased 4G prices by 20% last year. Therefore, the telco's ARPU now stands at ₹115 per user per month, up from ₹109 last quarter. The telco had also increased the prices of its entry-level prepaid plans, which helped propel its ARPU. However, the telco continues to hemorrhage subscribers, with the subscriber base reducing from 253 million to 247.2 million in 3QFY22. The telco, though, blamed the rise in tariffs as the reason for the decline. Even so, Vi has seen its 4G user base rise by about a million customers in the reported quarter, reaching 117 million.