IDEA - VODAFONE IDEA LIMITED Share Price

Management Outlook:
Vodafone Idea (Vi) anticipates growth driven by India's expanding telecom sector, emphasizing 4G/5G expansion and increasing data demand. The industry requires further tariff hikes to improve ROCE and fund technological investments. Vi aims to enhance network coverage (targeting 90% population coverage via 1.2 billion 4G users) and customer experience, expecting improved subscriber traction as investments accelerate. The company is optimistic about reversing subscriber losses, citing positive VLR trends in 11 circles, and plans to ramp up 5G rollout in key cities (Mumbai, Delhi, etc.) starting March 2025.

Major Points:

1. Network Investment:

   • Capex of Rs.100 billion planned for FY25; added 4,000 towers in Q3 (largest since merger).
   • 4G coverage expanded to 80% population (1.07 billion), targeting 90% (1.2 billion).
   • Deployed 4G on 900 MHz band (15,000 sites), boosting speeds by 28%.

2. Operational Improvements:

   • Recognized as India's best 4G network (Opensignal report).
   • Postpaid base growing (focus on M2M and corporate plans like Easy+).

3. Tariffs & ARPU:

   • July 2024 tariff hike contributed to 13% YoY ARPU growth (excluding M2M).
   • Advocates telescopic pricing for heavy data users; expects further hikes in 9"“12 months.

4. Government Engagement:

   • Bank guarantee waiver (Rs.247.5 billion) eases liquidity; pursuing debt resolution and potential equity conversion of deferred dues.

5. Digital Initiatives:

   • Vi App expansion (games, OTT, UPI autopay) and partnerships (e.g., Lionsgate Play).
   • Launched hyperlocal marketing campaigns and AI-driven spam management.

6. Financials:

   • Q3 FY25 revenue: Rs.111.2 billion (+4.2% YoY); EBITDA (ex-IndAS) up 15% to Rs.24.5 billion.
   • Net loss at Rs.66.1 billion; cash reserves: Rs.120.9 billion.

7. 5G Rollout:

   • Initial launches in Mumbai (March 2025), Delhi, Bangalore, etc., with phased expansion.

Vi remains focused on stabilizing subscriber metrics, monetizing digital services, and securing debt funding to sustain growth.

Question 1:
"First question is on the response to your network expansion so far... is that helping you in reducing churn which is currently from when customers upgrade from 2G to 4G lose those customers... gross adds don't seem to have changed much... help us understand... second question is on tariffs... when do you think is the right time for the industry to consider one more tariff hike?"

Answer Summary:
Network investments are showing early positive trends, with VLR subscribers turning positive in 11 circles as of December-January. Gross additions remain stable, but retention is improving. Tariff hikes are ideally annual but could occur sooner (9"“12 months) given low industry ROCE. Affordability for light users and tiered pricing for heavy data users are emphasized.

Question 2:
"Now that we are scaling up the network... How should we look at network cost going up... in the next few quarters?... On the 5G expansion, when should you start that?"

Answer Summary:
Network operating costs increase linearly (~Rs.70,000/month per new site). 5G rollout has begun, with Mumbai launching in March 2025, followed by Delhi, Bangalore, Chandigarh, and Patna in April. Priority circles (e.g., Gujarat, Maharashtra) will follow, with updates in subsequent earnings calls.

Question 3:
"Overall OPEX... has not really moved up... when will OPEX start following the moves in capex and marketing activity?"

Answer Summary:
OPEX containment efforts (e.g., energy efficiency, reduced content costs) offset network expansion expenses. Marketing costs are currently focused on localized campaigns but may increase with broader network readiness and TV campaigns later.

Question 4:
"Subscriber losses... has the run rate improved?... Updates on debt raise... roadblocks?"

Answer Summary:
Subscriber losses are improving, with positive VLR trends in 11 circles. Debt discussions with lenders are ongoing, delayed by banks seeking clarity on AGR liabilities. Government support (e.g., BG waiver) signals commitment, but timelines depend on holistic resolution.

Question 5:
"Postpaid subscriber base is growing, but data usage is declining... explain this divergence... users on less than 1 GB/month?"

Answer Summary:
Postpaid growth is driven by M2M (machine-to-machine) users, not consumer data consumption. Data usage per subscriber dipped but improved in January. Minimal down-trading to voice-only plans due to small price gaps and data necessity even for light users.

Question 6:
"Statutory payables due in FY26 and FY27... split between AGR and spectrum liabilities?"

Answer Summary:
FY26 AGR liability: ~Rs.16,000 crore; spectrum: ~Rs.12,000"“13,000 crore. FY27 spectrum liability rises to ~Rs.26,000"“27,000 crore.

Question 7 (Follow-up):
"Migration to BSNL post-tariff hike... reversal?... 5G user count?... Government engagement on debt conversion?"

Answer Summary:
BSNL's net port-ins have reversed to pre-hike levels. 5G device adoption is rising, but exact user numbers undisclosed. Government engagement focuses on converting deferred/non-deferred dues (AGR/spectrum) to equity, but specifics remain confidential.