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Vodafone Idea (Vi) announced its financial results for the third quarter of fiscal year 25 (Q3FY25), revealing a narrowing of its net loss compared to the same period in the previous year. The company reported a net loss of ₹6,609.3 crore, a 5.3% decrease from the ₹6,985.9 crore loss recorded in Q3FY24. This improvement can be attributed to lower finance costs and a notable increase in average revenue per user (ARPU). The reduction in finance costs signifies a positive step towards improved financial health, suggesting more effective management of debt and interest payments. The rise in ARPU, a key indicator of profitability in the telecom sector, demonstrates Vi's success in increasing the revenue generated per subscriber. This could be attributed to various factors, such as successful tariff hikes, the uptake of higher-value data plans, and improved customer retention strategies. However, the positive financial news is partially offset by a decline in the subscriber base, a trend that requires close monitoring and strategic intervention by the company.
Revenue from operations also showed positive growth, increasing by 4% year-on-year to reach ₹11,117.3 crore in Q3FY25. Sequentially, revenue growth was more modest at 1.6%. While this reflects a positive trajectory, the overall revenue performance needs to be considered within the context of the declining subscriber base. The company's ARPU experienced a significant increase of 12% year-on-year, reaching ₹156, indicating a greater revenue generation per existing subscriber. This is a crucial metric for assessing the financial health of the company, especially given the shrinking subscriber base. The sequential growth of 4.4% in ARPU further solidifies this positive trend. However, the substantial decline in the subscriber base – 15.4 million users or 7% annually, and a further 2% sequentially – warrants a deeper analysis of the underlying causes and necessitates a strategic response to regain lost subscribers and attract new ones. The considerable drop in the number of users raises concerns about the company's competitiveness and market share in the face of intense competition from other telecom players.
The reduction in debt from banks is a significant positive development. Over the past year, Vi managed to reduce its bank debt by a substantial ₹5,290 crore, bringing the total down to ₹2,330 crore as of December 31, 2024, compared to ₹7,620 crore in Q3FY24. This considerable reduction in debt indicates progress in improving the company's financial stability and reducing its financial burden. The positive cash and bank balance of ₹1,209 crore provides a further indication of improved financial liquidity. This is a critical factor in supporting the company's ongoing operations and future investments, especially considering the planned 5G rollout. The company's efforts to improve its network infrastructure are also noteworthy. The increase in 4G population coverage by 41 million, a 24% rise in 4G data capacity, and a 28% increase in 4G speeds demonstrate significant progress in enhancing network capabilities and improving the user experience. These investments in network infrastructure are crucial for retaining existing subscribers and attracting new ones, especially given the growing demand for high-speed data services.
Looking ahead, Vi's plans for a phased 5G rollout highlight its commitment to providing cutting-edge technology to its customers. The commercial launch of 5G services is scheduled for March 2025 in Mumbai and April 2025 in Delhi, Bangalore, Chandigarh, and Patna. This strategic expansion into 5G technology will allow Vi to compete effectively with other major telecom players, offering enhanced services and attracting new subscribers. This expansion is likely to require significant capital expenditure (CAPEX), and the company's CEO, Akshaya Moondra, confirmed that investments are increasing. Moondra emphasized the importance of the equity infusion of ₹1,910 crore from a promoter, which, along with other recent investments, has secured approximately ₹260 billion in fresh equity capital over the past 10 months. The company is also actively engaging with lenders to secure debt financing for its planned network expansion, aiming for an investment of ₹500-550 billion over three years. The government's decision to waive bank guarantees is a supportive measure for the telecom sector and could facilitate further investments in network upgrades and expansion. The improved EBITDA margin of 42.4% in Q3FY25 compared to 41.6% in Q2FY25 reflects positive operational efficiency and strengthens the company's financial outlook.
Source: Vodafone Idea’s Q3 net loss narrows 5.3% to ₹6,609 crore