Vodafone Idea Limited (VIL) recently came out with the results for Q2 FY25. This was a result investors were waiting eagerly for as it reflected the change in ARPU (average revenue per user) after tariff hikes, and the effect of the same on the subscriber base. It is safe to say, what we expected, turned out to be true. While there was a negative hit to the subscriber base, the telco did improve on other metrics like ARPU, revenues, and broadband coverage. It is worth noting that Vi secured funds from investors earlier in the year, and the funds are being used by the telco to scale the capex (capital expenditure) to improve network performance.
Here's everything you should know about Vi's performance in Q2 FY25.
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The Good and the Bad for Vodafone Idea in Q2 FY25
Let's go over the positives first. Vodafone Idea saw its revenues going up by 4% QoQ. This is a result of tariff hike. Then, the telco's customer ARPU jumped by 7.8% QoQ to Rs 166 from Rs 154, a major improvement. Vi also scaled networks, resulting in increased 4G population coverage (from 1047 million to 1064 million QoQ). The telco also increased the total number of broadband sites in the country from 417,245 to 439,599 with the help of recently raised funds.
The bank debt reduced majorly from Rs 46.5 billion to Rs 32.5 billion QoQ. Vi added about 42,000 4G sites in a single quarter, the most added by the telco in a quarter in a single quarter. This has helped Vi in improving 4G speeds for the customers. The telco confirmed that it deployed 900 MHz band spectrum across 20,500 sites, and 1800 MHz and 2100 MHz bands across 21,200 sites during the quarter. The LTE 900 MHz band is now available in 16 out of 17 priority circles of the telco. This will help with boosting indoor coverage experience for the consumers.
There was a rise in capex during the quarter to Rs 13.6 billion from Rs 7.6 billion in the previous quarter. In the second half of FY25, the expected capex is Rs 80 billion, almost 4x of what the telco spent in the first half. Along with deploying additional 4G sites, the telco shut down 19,700 3G sites across the country. Vi has confirmed that its 3G is now present in 8 circles only. Also, the postpaid users went up by 0.4 million users to 24.5 million users.
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Now let's look at what wrong for the telco during the quarter.
Firstly, the loss narrowed to Rs 7,184 crore. The telco also saw a decline in 4G/5G users from 126.7 million to 125.9 million QoQ. The overall subscriber base dipped from 210 million to 205 million. When it came to active users, the base declined from 188.3 million to 179.5 million, a loss of 8.8 million users. The blended churn rate went up from 4% to 4.5%, which is signficantly high.
However, one thing you should take into account here is that the subscriber loss accelerated due to the implementation of tariff hikes in July 2024. This was seen across the sector, and Vi wasn't the only telco to lose users.
Overall, even though the subscribers have gone down, the improvement in network performance, 4G coverage and capacity should help the telco in potentially adding users in the future.
