Vodafone Idea investors are in pain

While Q1FY23 net loss narrowed from 7,296 crore 7,319 crore in the year-ago quarter, this was higher than analysts’ estimates. However, year-over-year revenue increased 13%. Average revenue per user (ARPU) improved 128, up 3.2% sequentially. Remember, the company hiked tariffs in November and it is seeing some flow-through effects. But this does not provide much relief to its investors, as the company continues to lose customers.

At the end of Q1, Vodafone Idea’s subscriber base stood at 240.4 million versus 243.8 million in the previous quarter. Rival Reliance Jio saw a growth of 9.7 million in its subscribers during the quarter. Vodafone also lags behind peers on usage metrics.

“Total data traffic was up 4% qq to 5.4 exabyte in 1Q (vs +5% for R-Jio including FTTH). Mixed data usage in 1Q (vs 12.5GB qq and 20.8GB/month) increased from qq to 13GB/month For R-Jio), “Analyst at Nomura Financial Advisory & Securities (India) Pvt Ltd. Ltd said in a report.

Moreover, VIL’s participation in the recently held 5G auction was also marginal compared to Reliance Jio and Bharti Airtel Ltd. The company bought mid-band 5G spectrum (3300 MHz band) and mmWave 5G spectrum (26 GHz band) in its 17 priority circles. 16 circles. The total commitment of VIL for the spectrum received in this auction was 18,800 crore with annual installment of 1,680 crore, the company said in a press release.

Analysts at Motilal Oswal Financial Services Ltd note that VIL’s 5G spectrum bid will increase its debt by around 10%.

VIL’s total gross debt (excluding lease liabilities and including interest accrued but not outstanding) as on Q1FY23 stood at Rs 1.2 trillion. This includes deferred spectrum payment obligation, AGR liability due to the government and loans from banks and financial institutions. Net debt stood at Rs 1.98 lakh crore.

Against this backdrop, VIL management’s comments on external fund raising, tariff hike plans and capital guidance will be critical to the stock’s outlook.

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