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Extracts from Vi earning call, Q4 2024

Akshaya Moondra, CEO, Vodafone Idea Limited

On equity raised. We have successfully raised equity of INR 215 billion during the last 3 months. Additionally, we are discussing with a consortium of banks to raise INR 250 billion in debt and additional nonfund-based facilities of INR 100 billion. Post the telecom reform package in September 2021, our bank exposure has been reduced by INR 347 billion.

On strategic initiatives. Our first strategic initiative is our focused investment approach. Our investments have been impacted due to liquidity constraints over the last few years. This equity funding and proposed bank facilities will be utilized primarily towards CapEx over the next 3 years, which is expected to be in the range of INR 500 billion to 550 billion, enabling us to compete and participate in the industry growth opportunities effectively. The CapEx will be towards expanding 4G population coverage in 17 priority circles, which contribute over 98 percent of our revenue and around 92% of industry revenues. 5G launch in key cities or geographies, capacity expansion to address the increasing data demand and investment to grow our enterprise business. We will be launching 5G now, we will be well placed to effectively utilize our CapEx spend as we will be able to address a part of the capacity requirements via 5G instead of 4G.

ARPU.
We continue to focus on getting more customers to use unlimited data plans for further ARPU improvements. We have seen ARPU growth for 11 consecutive quarters now. Q4 FY ’24 ARPU stands at INR 146 compared to INR 145 in Q3 FY ’24 despite one day less during the quarter. Over the last 2 years, our ARPU CAGR has reached 8.4%, which is the highest in the industry.

Details on INR 50,000-55000 crores CapEx.
CapEx of INR 50,000 crores to INR 55,000 crores over the next 3 years will be spent abroad across 4 broad categories. First is the expansion of 4G coverage, which would also include a lot of infill for experience improvement, particularly by rolling out more sites in the sub-gigahertz or L900 segment. The second would be capacity growth, mostly in 4G, where we already have 4G deployed or where we plan to deploy 4G. The third category would be 5G, where the rollout has to be started afresh. And, of course, some CapEx is specific to enterprise business. So these are the 4 buckets of CapEx. In terms of timeline, I would say that our top priority is 4G coverage because that is, to my mind, the only reason why we continue to lose subscribers. And so we have to expand our 4G coverage. That CapEx will be fairly accelerated. There are also some areas where we have to kind of decongest because of capacity issues. These are very few, but that would be the top priority and will be accelerated. The rest of the investment in capacity growth will happen as the traffic capacity grows. On the 5G front, we expect that we should be able to start rolling out 5G on a large scale about 6 months from now. The 5G market, as you see, has been evolving. So, we will have to see how the market is evolving; the main focus will be on cities or other areas with a large concentration of 5G devices. However, I would say that 5G investment will be a bit iterative in nature in terms of timing, and we will make investments as the market evolves.

On the wide gap between Vi and Airtel, 1.84 lakh sites vs 3.3 lakh sites.
The gap represents both the difference in coverage and the difference in capacity or traffic. Now, to the extent there is a difference in traffic, I don’t think we need to build so many sites. So basically, we are focused on saying that we need to expand coverage in our 17 priority circles to be competitive vis-à-vis competition. Secondly, in the 5 remaining nonpriority circles, we will be investing there. However, the priority of investment will be different rather than matching or competing at par with the competition.

On the AGR dues, of INR 70,000 crores. The matter is sub judice, so I’m not getting into the merits, but I can give you an indication of what we have requested. We have asked for corrections on the base amount, which is about INR 6,000 crores. As far as the AGR demand is concerned, it had built up interest, penalty, and interest on the penalty. We don’t have the exact details of the INR 58,000-odd crore of the demand, which was a part of the affidavit filed by DoT. But our rough sense is that the base amount is about 25% and the overall amount then becomes 4x. So if I take that principle, INR 6,000 crore base correction should be about INR 24,000 crore of the total amount. This is the amount as of around October ’19, and there would be interest accrual at the rate of around 8% per annum. So I think till now, it will be somewhere around 36%.

You can add about 36% of accrued interest to that amount until March ‘24, representing an amount where we seek correction. The amount I’m indicating to you does not include the additional prayer we have in the curative petition for waiver of penalty because the last judgment on the matter was at the tribunal, where it was largely decided in favor of the industry. So in our judgment, the penalty could also be taken off. So these are the 2 requests that we have.

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