Company Update : Vodafone Idea Ltd by Motilal Oswal Financial Services Ltd
Slightly ahead, driven by better enterprise revenue
* Vodafone Idea’s (Vi) overall revenue came in at INR112b (+1.6% QoQ, +2% YoY, vs. our est. INR111b).
* Reported EBITDA at INR46.9b (+1.6% QoQ, +3% YoY, vs. ~3.5-4% QoQ for Bharti-India wireless and RJio) was ~2% above our estimate, on account of higher revenue and lower network opex (+1% QoQ, 2% below).
* Reported EBITDA margin was stable QoQ at 41.8% (up ~25bp YoY, +90bp/+20bp QoQ for Bharti-India wireless and RJio) and was ~35bp above our estimate.
* Pre-Ind AS 116 EBITDA at INR22.5b rose ~3% QoQ (-3% YoY) and was 5% above our estimate. Pre-Ind AS 116 EBITDA margin expanded ~30bp QoQ to 20.1% (-115bp YoY, 80bp above our estimate).
* Vi’s reported losses narrowed to INR55b (vs. INR66b QoQ and our estimate of INR66b), primarily due to lower interest cost (-26% QoQ, one-time settlement with a vendor, we believe, Indus Towers).
* Vi’s reported net debt (excluding leases but including interest accrued and not due) increased INR56b QoQ to INR2t. Vi still owes ~INR2.01t to GoI for deferred spectrum and AGR dues. External/Banking debt further declined to ~INR15.4b (vs. INR19.3b QoQ).
* Vi’s capex moderated further to INR17.5b (vs. INR24.4b in 1QFY26).
Wireless: In-line performance; ARPU uptick driven by subscriber mix improvements and one extra day QoQ
* Wireless ARPU was up ~1.2% QoQ to INR167 (+7% YoY, vs. +1%/+2% QoQ for RJio/Bharti, vs. our est. of INR166), driven by one extra day QoQ and subscriber mix improvements.
* Vi indicated that customer ARPU (excluding M2M) was up ~1.6% QoQ to INR180 (vs. +2.3% QoQ at INR256 for Bharti).
* Vi’s overall subscriber base at 196.7m declined 1m QoQ (vs. 0.5m net declines in 1QFY26 and in line with our estimates).
* Vi’s monthly churn inched up QoQ to 4.3% (vs. 20bp QoQ uptick for Bharti at 2.9%) and remains a key monitorable.
* Vi’s postpaid subscriber base (including M2M) further improved QoQ (rising ~1.3m QoQ) to 27.9m, largely driven by ~0.7m M2M net adds.
* 4G/5G subscriber base inched up ~0.4m QoQ, while data subs declined ~0.1m. We believe Vi has lost ~0.8m pure-play data subs (excl. M2M subs).
* Wireless revenue at INR98.8b (+2% YoY, in line) was up 0.8% QoQ (vs. ~3% QoQ increase for Bharti/RJio), driven by a slight ARPU uptick.
Other highlights: Data usage improves due to 5G launch and unlimited data offerings, but remains well below peers
* Enterprise revenue at INR12.9b (+7% QoQ, +7% YoY) was ~5.5% above our estimate.
* Vi’s data volume grew ~8% QoQ (+9% QoQ in 1QFY26), driven by 5G launch and trended largely in line with ~7% QoQ growth for Bharti/RJio, including FTTH, albeit on a much lower base.
* Data usage per data subscriber increased to 18GB/month (from 16.7GB QoQ), but remains significantly below peers [RJio 38.8GB (including FTTH contribution), Bharti 28.3GB].
* Voice usage on Vi network declined ~1% QoQ (vs. -2% QoQ in 1QFY26, vs. +1% to -1% QoQ for Bharti and RJio, respectively).
* Implied minute of usage per subscriber declined to 585min/month (vs. 590min QoQ), but remains significantly below 1,145mins/ 996mins for Bharti/RJio.
* Vi’s trade payables declined to INR90b (vs. INR107b QoQ).
5G services expanded to 29 cities; network rollout moderates further
* Vi’s network rollout moderated further to ~1.3k towers (~1.9k MBB towers vs. 4.6k QoQ) and ~10.8k net broadband sites in 2Q (vs. 21.6k QoQ).
* Vi’s 4G population coverage stood at ~84% by Sep’25 (vs. 77% in Mar’24, 84% in Jun’25).
* Management had earlier indicated that 4G population coverage would be further ramped up to ~1.2b (or 90% of overall population).
* Vi has expanded its 5G services to 29 cities across all 17 priority circles and plans to expand 5G services to more cities based on customer demand and 5G handset penetration.
Bharti remains the biggest gainer on RMS in 2QFY26
* On our estimates, Bharti was once again the biggest gainer on revenue market share (RMS) in 2QFY26 among the three private telcos, gaining 17bp QoQ (+127bp YoY), with RJio gaining modest 3bp QoQ (but losing 10bp YoY) and Vi losing a further 20bp QoQ RMS in 2QFY26 (and -117bp YoY).
* On subscriber market share (SMS), RJio remained the biggest gainer in 2QFY26 among the three private telcos, with 27bp QoQ gain (+81bp YoY) as Bharti lost 7bp QoQ (but gained 44bp YoY) and Vi lost further 20bp QoQ (and 124bp YoY
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