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- 04 Nov 2022
- ICICIdirect Research
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VODAFONE IDEA CONTINUES TO STRUGGLE WITH CHURN, LEVERAGE
IDEA - 8 Change: -0.17 (-2.11 %)News:
Reported revenues were up 2% QoQ to Rs 10,615 crore. ARPU grew ~2% QoQ to Rs 131, in line with expectations, driven higher number of days during the quarter. The subscriber base decline, however, at ~6 million (vs. 3.4 mn decline in Q1), increased with churn rate rising to 4.3% vs. 3.5% in Q1. 4G sub base saw addition of merely 1.5 mn QoQ to 120.6 million. Reported EBITDA margins was down 298 bps QoQ to 38.6%, below our expectation of 41.4%, owing to higher-than-expected network opex (that was up 16% QoQ and higher marketing expenses. The reported loss was at Rs 7596 crore (our estimate: Rs 7409 crore loss) owing to lower EBITDA. Net debt at Rs 2.2 lakh crore was up ~Rs 21900 crore, owing to recent spectrum purchase of Rs 18800 crore and cash burn
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VIL remains the weakest private telco. The need for capitalisation is urgent mainly due to its upcoming debt repayment requirement (~Rs 5000 crore in FY23), lagging spends on network and continued relative market share loss. The delay in 5G launch could further lead to churn in high ARPU and postpaid customer. We highlight that recent government relief measures would ensure survival of VIL but future growth outlook remains uncertain
Impact:
Negative