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Vodafone Idea – Q4FY23 First Cut, Outlook remains gloomy!

Vodafone Idea’s (VIL) Q4FY23 performance was weak with muted ARPU and continued churn (albeit at lower pace QoQ) and losses.

Q4FY23 Earnings Summary

  • Reported revenues were down 0.8% QoQ to | 10,532 crore. ARPU was flat QoQ to | 135, tad lower than expectations of | 136. The subscriber base decline, however, at ~2.7 million (vs. 5.8 mn decline in Q3), eased a bit with churn rate at 3.8%. 4G sub base saw addition of merely 1 mn QoQ to 122.6 million
  • Reported EBITDA margins was up 60 bps QoQ to 40%, with QoQ margins improvement led by lower network opex
  • The reported loss stood at | 6419 crore owing to weak operating print
  • The net debt at | 2.09 lakh crore was down by ~|14000 crore, owing to conversion of debt representing NPV of interest arising due to deferment of spectrum instalments and AGR dues into equity issued to Government of India. Capex spends were | 560 crore vs. | 750 crore in Q3, underwhelming vis-à-vis peers, given the balance sheet stress

View: VIL remains the weakest private telco. The need for capitalisation is urgent mainly due to its upcoming debt repayment requirement, lagging spends on network and continued relative market share loss. The delay in 5G launch could further lead to elevated churn in high ARPU and postpaid customer. We highlight that recent government relief measures (including moratorium conversion of interest on AGR dues) has not meaningfully altered future growth outlook which remains gloomy.

Impact: Negative

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ICICI Securities

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