Vodafone Idea Q2 loss narrows to Rs 7,176 crore as ARPU rises

New Delhi: Debt-ridden telecom firm Vodafone Idea on Wednesday said its consolidated loss narrowed to Rs 7,175.9 crore in the September quarter mainly on account of increase in average revenue per user (ARPU) post-tariff hike in July.

Though the tariff hike resulted in the company losing customers on a quarterly basis, Vodafone Idea CEO Akshya Moondra still indicated the need for another hike to cover cost of capital.

During the reported quarter, VIL concluded a mega deal of about USD 3.6 billion (approximately Rs 30,000 crore), for supply of network equipment over a period of three years with Nokia, Ericsson, and Samsung for which delivery and deployment commenced in October.

The company had posted a loss of Rs 8,746.6 crore in the same period a year ago.

The consolidated revenue from services of VIL increased 1.8 per cent to Rs 10,918.1 crore during the second quarter of the current fiscal year from Rs 10,714.6 crore in the year-ago period, it said in a regulatory filing.

Its consolidated revenue from operations increased to Rs 10,932.2 crore during the quarter from Rs 10,716.3 crore a year ago, it stated.

"The impact of recent tariff interventions can be seen in improved ARPUs and revenue for the quarter, though the full impact will be reflected over the next couple of quarters. Further tariff rationalisation is needed for the industry to fully cover its cost of capital," Moondra said in a statement.

VIL increased mobile services rates by 11-24 per cent from July 4.

The company's mobile customer ARPU, excluding those of machine-to-machine, increased 7.8 per cent to Rs 166 on quarter-over-quarter basis from Rs 154 in the April-June period.

VIL's total subscriber base, as well as those of 4G, declined after the tariff hike.

The company's overall subscriber base declined to 20.5 crore from 21 crore and 4G subscriber base to 12.59 crore from 12.67 crore on quarter-on-quarter basis.

The company has announced plans to boost its network capacity with total capital expenditure of about Rs 10,000 crore during the current fiscal year, which will help the company improve the network and arrest the decline of subscribers.

"Post the successful capital raise, we kickstarted our 4G expansion drive on an accelerated trajectory. We expanded 4G data capacity by 14 per cent and 4G population coverage by 22 million, and consequently our 4G speeds improved 18 per cent.

"In parallel, we worked on closure of long-term capex contracts and recently awarded capex deals worth USD 3.6 billion to three global partners Nokia, Ericsson and Samsung for the supply of network equipment over next 3 years," Moondra said.

VIL capex during the report increased 79 per cent to Rs 1,360 crore from Rs 760 crore in the June quarter.

The company has plans to invest about Rs 8,000 crore in the second half of the current fiscal year.

"Post the conclusion of the mega deal with the three global equipment manufacturers in September, 2024, the delivery and deployment started in October, 2024. The 4G expansion is in progress and our target is to achieve 4G population coverage of 1.1 billion by March 2025 and 1.2 billion by September 2025. The rollout of 5G in key geographies will start in the fourth quarter of 2025," VIL said.

During the quarter, VIL added about 42,000 sites for 4G services, which is the largest-ever addition in 4G sites in a quarter by the company.

The company has shut down about 19,700 sites of 3G and its overall broadband site count stood around 439,600 as of September 30, 2024.

"Due to rapid shutting down of 3G sites across circles, 3G sites are present only in 8 circles as of September 30, 2024," the statement said.

The total debt of VIL stood over Rs 2,22,470 crore. The total debt includes Rs 3,271 crore due to be paid to banks and financial institutions and Rs 2,12,260 crore government dues.

The payment obligations to the government comprises Rs 1,41,940 crore for deferred spectrum and Rs 70,320 crore adjusted gross revenue liability.

VIL, which has been struggling to keep its business afloat, is in discussion with banks, financial institutions and government for relief on payment obligations.

The company is in discussion with banks for waivers and next steps for loan payments. Loan amount of Rs 1,720.1 crore and other deferred payment obligations of the company of Rs 643.5 crore are payable by September 30, 2025.

It is also in discussion with the government for a waiver of Rs 24,746.9 crore bank guarantee that is required to submit 13 months in advance of spectrum payment due between October 2025 and September 2026.

VIL has to pay Rs 27,230.3 crore for deferred spectrum instalments from October 20, 2025 to March 31, 2026 and adjusted gross revenue instalments of March 31, 2026.

The company expects that in case of cash shortfall, the amount due to the government can be converted into equity.