Vodafone Idea Short of Funds to Incur Capex: ICICI Securities

A positive for the telco was that its 4G subscribers grew. Vi added 3.3 million new 4G subscribers during the quarter.

Highlights

  • The average revenue per user (ARPU) of the company grew by 4.8% QoQ to Rs 109.
  • Vodafone Idea (Vi) is short of funds for incurring capex.
  • ICICI Securities has said that until and unless the telco doesn’t add new subscribers and expand user base, major revenue growth is not possible.

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Vodafone Idea

Vodafone Idea (Vi) is short of funds for incurring capex. The telco has indeed benefitted from the relief measures announced by the government, but the absence of cash for incurring capex is an issue. Vi’s competitors including Reliance Jio and Bharti Airtel are heavily investing in their networks to increase capacity and coverage. But due to stale revenues and cash flow, Vodafone Idea is not able to do that. ICICI Securities said that Vodafone Idea is very hopeful to raise cash by the year-end which will help the telco a lot in making new investments.

Vodafone Idea Net Debt Piles to Rs 1,927 Billion

As per the capital market company, Vodafone Idea’s net debt has piled to Rs 1,927 billion. This includes deferred spectrum liability of Rs 1,047 billion, adjusted gross revenue (AGR) dues of Rs 634 billion, and bank borrowing of Rs 228 billion.

Vi will have Rs 97 billion in dues to clear in the next 12 months (by September 2022). If the company is able to successfully raise funds by the end of FY22, it should be able to clear dues comfortably as well as invest in networks.

The telco’s revenues fell 12.8% YoY in the September FY22 quarter. However, mobile revenues for the company saw an increase by 1.8% QoQ to Rs 83 billion. The subscriber base dipped by 0.9% which affected the mobile revenues.

However, a positive for the telco was that its 4G subscribers grew. Vodafone Idea added 3.3 million new 4G subscribers during the quarter. Further, the average revenue per user (ARPU) of the company grew by 4.8% QoQ to Rs 109. An additional day during the quarter helped the telco with its ARPU and the price hike in base plans also helped. ICICI Securities has said that until and unless the telco doesn’t add new subscribers and expand the user base, major revenue growth is not possible.

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