Vodafone Idea Stock Dips Post Liquidity Concerns

For the past two quarters (referring to the quarters before Q1 FY23), the telco had sustained a churn rate of 3.4%. It wasn't good, but it stayed constant at least. However, that went up to 3.5% this quarter. It was the same case as on Q1 FY22. So, in a complete year, the subscriber churn rate came back to where it was. 

Highlights

  • Vodafone Idea's stock dipped on Thursday to Rs 8.75 (-3.85%).
  • Then, while the ARPU (average revenue per user) figure rose, it wasn't to the tune of growth that Airtel and Jio's ARPU figures showed
  • While there was a rise in revenues, there are concerns about how the telco will be able to retain customers. 

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Vodafone Idea

Vodafone Idea's stock dipped on Thursday to Rs 8.75 (-3.85%). This is a result of the company posting massive losses in the first quarter of FY23. Now, of course, no one was expecting the telco to post profits, but there were some key metrics which didn't look too good for Vi. First of all, the growth in 4G subscribers is just too slow. Vi added a mere 0.9 million 4G subscribers in the entire quarter.

Then, while the ARPU (average revenue per user) figure rose, it wasn't to the tune of growth that Airtel and Jio's ARPU figures showed. The tariff hike implemented by Vi is the same as what Airtel did, so the investors are likely going to question the slow growth in ARPU because that means the telco isn't making enough money.

Vodafone Idea's Subscriber Churn Rate is an Issue

Another concerning thing was the subscriber churn rate. For the past two quarters (referring to the quarters before Q1 FY23), the telco had sustained a churn rate of 3.4%. It wasn't good, but it stayed constant at least. However, that went up to 3.5% this quarter. It was the same case as on Q1 FY22. So, in a complete year, the subscriber churn rate came back to where it was.

Yes, data usage and voice calling usage increased, but it didn't convert into any profits. While there was a rise in revenues, there are concerns about how the telco will be able to retain customers.

VLR subscribers, which means active users have also dipped for Vodafone Idea. The number went down to 218.7 million in Q1 FY23 from 226.1 million in Q4 Fy22. At this rate, the active subscriber base of Vi would go below 200 million in a matter of a few quarters. The telco is again talking about raising tariffs by the end of this year. It might push the subscriber churn rate even higher, and it will definitely have an impact on the subscriber base of Vi.

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