- 04 Aug 2022
- ICICIdirect Research
VODAFONE IDEA REPORTS LOWER MARGINS ON HIGH MARKETING SPENDS
IDEA - 8 Change: 0.10 (1.34 %)News: Vodafone Idea’s (VIL) Q1FY23 performance was weak with margins decline. While the tariff hike saw some residual pass through. Reported revenues were up 6.6% QoQ to Rs 10,410 crore, as ARPU grew by ~3.2% QoQ to Rs 128, tad higher than 126, expected. The subscriber base declined at ~3.4 million (similar to 3.4 mn in Q4), with churn rate at 3.5%. 4G sub base saw addition of merely 0.9 mn QoQ to 119 million. Reported EBITDA margins was down 529 bps QoQ to 40.1% owing to high marketing costs. On adjusted basis, margins was down 380 bps. The reported loss stood at Rs 7297 crore.
View: While government relief (option of conversion of dues into equity) ensures the survival, the company needs to raise capital as early as possible to stay competitive. Subscriber churn also needs to be controlled, while network spends lags vis-à-vis peers.
Impact: Negative.