Vodafone Idea (Vi) has been on the run trying to improve its average revenue per user (ARPU) figure for quite a while to maximise its earnings. The telco has reported an ARPU of Rs 104 in Q1 FY22 (April – June 2021). In comparison, the telco had an ARPU of Rs 114 in the same period last year. So there’s an ARPU drop of Rs 10 in one year for Vi. Interestingly, during the same period, Vi’s total number of 4G subscribers increased.
In Q1 FY21, the telco had a total of 104.6 million 4G subscribers, and that number rose to 112.9 million in Q1 FY22. While it is a short gain in numbers, it is something that should help with increasing the ARPU in the short term. It is a little surprising to see the telco’s ARPU dip even after adding new 4G subscribers. Maybe the telco’s high paying customers are leaving the network, but then, who knows for sure.
Vodafone Idea Quarter-on-Quarter Losses Widen
Vodafone Idea (Vi) has been losing money since the time the merger happened. The telco is still yearning for profits, but in a tragic development, the telco’s QoQ loss has widened. Vi had posted a loss of Rs 6,985.1 crores in Q4 FY21. But that has increased to Rs 7,312.9 crores in Q1 FY22.
The increase of loss is directly in line with the dipping ARPU number, which is not surprising at all. However, after another quarter of losses, the telco’s cash reserve is just running out, and there is no lender who would possibly want to risk giving money to Vi right now.
Even the promoters of the company have said that they don’t want to infuse any more capital in Vi. This just shows that they don’t believe that the company’s worth putting any more money in. With the cash running out and the rise in losses quarter after quarter, the telco might be heading towards bankruptcy.
There’s only marginal help that a relief package would offer to Vi. Its ARPU is unlikely to increase even in the July-September 2021 quarter since there’s no increase in tariffs. Even the subscriber churn rate has increased from 2% in Q1 FY21 to 3.5% in Q1 FY22.
Vodafone Idea’s shares closed at Rs 9.95 on June 30, 2021. But just a few days back, in August, the shares of the company had fallen under Rs 5 because of the controversies and the stepping down of Aditya Mangalam Birla from the position of Chairman (Non-Executive).
Things can go grim really fast for the telco as just in another 7 months; it needs to pay another instalment of the adjusted gross revenue (AGR) dues. The Supreme Court didn’t side with the telco’s request of rectifying the errors in the final AGR amount.
The most worrying thing right now is the increasing loss. The telco hasn’t been able to get any new investor on board and is still looking for a relief package from the government. Only time will tell what will happen to Vodafone Idea, but as of now, the company looks to be heading towards a possible bankruptcy.