Company Update : Vodafone Idea Ltd By Motilal Oswal Financial Services Ltd
Above estimates, driven by lower expenses; network rollout accelerates
* Vodafone Idea’s (Vi) overall revenue at INR110b (-1% QoQ, +4% YoY) was ~1% above our estimate, driven by lower–than-estimated subs declines and slightly higher ARPU.
* Reported EBITDA at INR46.6b (-1% QoQ, +8% YoY, vs. ~2% QoQ for RJio and Bharti-India wireless) was ~4% above our estimate on lower network opex (-2% QoQ, 1% below) and lower SG&A costs (-1% QoQ, 2% below).
* Reported EBITDA margin contracted ~10bp QoQ to 42.3% (up 145bp YoY, flat/+40bp QoQ for RJio and Bharti-India wireless) and was ~110bp above our estimate.
* Pre Ind-AS 116 EBITDA at INR23.2b declined ~5% QoQ (+6% YoY) and was ~5% above our estimate. Pre Ind-AS 116 EBITDA margin contracted ~90bp QoQ to 21.1% (+50bp YoY and was ~75bp higher vs. our estimate).
* Vi’s reported losses widened to INR72b (vs. INR66b QoQ and our estimate of INR73.7b). We note 3Q had benefits of lower interest cost on account of settlement with a vendor.
* Vi’s reported net debt (excluding leases but including interest accrued and not due) declined by INR302b QoQ to INR1.87t, following the accounting of ~INR369.5b equity conversion of GoI dues. Vi still owes ~INR1.95t to GoI for deferred spectrum and AGR dues. External/Banking debt was stable QoQ at ~INR23b (lower vs. INR42b YoY).
* Vi’s capex increased further to INR42b, the highest since the merger. FY25 capex stood at ~INR96b.
* Vi has sought an enabling resolution to raise up to INR200b and formed a committee to evaluate the modes of fund raising.
Subscriber declines moderate; residual benefit of tariff hike offset by two fewer days
* Wireless ARPU was up ~1% QoQ to INR164 (+12% YoY, vs. flat/+1% QoQ for Bharti/RJio) and was ~1% above our estimate of INR163, driven by residual benefits of tariff hikes.
* Vi indicated that customer ARPU (excluding M2M) was up ~1% QoQ to INR175 (vs. flat QoQ at INR245 for Bharti).
* Vi’s overall subscriber base at 198.2m declined by 1.6m QoQ (significant moderation vs. 5.2m net declines in 3QFY25 and better than our expectation of 3.5m QoQ decline) as churn rate moderated.
* Vi’s monthly churn declined ~40bp QoQ to 4.1% (vs. a decline of ~20bp QoQ for Bharti) and remains a key monitorable.
* Vi’s postpaid subscriber base (including M2M) further improved QoQ (rising by ~0.4m QoQ) to 25.6m, 4G/5G subscriber base inched up by 0.4m QoQ, while data subs declined by ~0.1m QoQ). We believe Vi lost ~0.8m pureplay data subs (excl. M2M subs).
* Wireless revenue at INR98b (+4.5% YoY, 1% above) declined 1% sequentially (vs. 1%/2% QoQ increase for Bharti/RJio) as residual tariff hike benefits were partly offset by continued subscriber declines and two fewer days QoQ.
Other highlights: Consumer engagement weaker and remains well below peers; trade payables decline
* Enterprise revenue at INR11.6b (-4% QoQ, -4% YoY) was ~4% below our estimate.
* Vi’s data volume grew ~5% QoQ (-2% QoQ in 3QFY25) and was in line vs. +5% QoQ growth for Bharti and RJio, including FTTH, albeit on a much lower base.
* Data usage per data subscriber increased to 15.3GB/month (from 14.5GB QoQ) but remains significantly below peers [RJio (33.6GB including FTTH contribution), Bharti 25.1GB].
* Voice usage on Vi network declined ~1% QoQ (vs. -1% QoQ in 3QFY25, weaker vs. +2% QoQ for Bharti and RJio).
* Implied minute of usage per subscriber improved marginally to 598min/month (vs. 593min QoQ) but remained significantly below 1,163mins/1,024mins for Bharti/RJio.
* Vi’s trade payables declined further by ~INR10b QoQ to INR107b (vs. INR138b at FY24 end). This primarily comprises dues to tower and network vendors such as Indus Towers.
Network rollout accelerates in 4Q
* Vi added ~7.6k towers (~8.5k MBB towers) and ~34k net broadband sites in 4Q. This is the largest quarterly rollout for Vi since the merger.
* As a result, Vi’s 4G population coverage increased by ~600bp, reaching 83% by Mar’25.
* Management indicated that 4G population coverage would be further ramped up to ~1.2b (or 90% of the overall population).
* Vi has commercially launched 5G services in Mumbai, Delhi, Chandigarh, and Patna, with plans to expand 5G services to key cities in 17 priority circles by Aug’25.
Bharti the biggest gainer from tariff hikes in FY25
* On our estimates, Bharti was the biggest gainer on revenue market share (RMS) in FY25, gaining ~177bp YoY (+7bp QoQ in 4Q). RJio lost ~22bp YoY (but gained ~27bp QoQ in 4Q), while Vi lost a further ~155bp in FY25 (and -34bp QoQ in 4Q) among the three private telcos.
* Bharti also gained 23bp QoQ (+108bp YoY) in subscriber market share (SMS), with R-Jio gaining 8bp QoQ (~21bp YoY), while Vi lost further ~30bp QoQ (and ~130bp YoY).
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
