Vodafone Idea Cuts Losses, but Market isn’t Buying it, Stock Slips 7%

Vodafone Idea Shares: The telecom company failed to impress investors with its declining loss figure. While the overall revenue for Q3FY25 came largely in-line with the estimates, at Rs 11,117 crore, marking a 4% year-on-year (YoY) surge from Rs 10,673 crore recorded in the corresponding quarter of the previous year, the debt figure also jumped.

The telecom company reported a net debt of Rs 2.18 lakh crore, an increase of Rs 5,500 crore quarter-on-quarter (QoQ).

The company owes around Rs 2.27 lakh crore to the government for deferred spectrum and AGR dues. However, external debt declined to a modest Rs 2,300 crore, as per a report by Motilal Oswal.

At 10:10 am, the Vodafone shares were trading at Rs 8.24, down by nearly 7% on the National Stock Exchange.

Meanwhile, Ebitda stood at Rs 4,700 crore, a 4% surge from previous quarter, this was mainly due to lower employee costs and SG&A (sales & general expenses) costs. Ebitda margins, however, improved by around 75 bps (basis points). In contrast, Jio's margin dropped 25 bps while Bharti Airtel witnessed a surge of 180 bps in Ebitda margins.

Tariff Hikes Fails to Cheer

While investors hoped tariff hikes would lift Vodafone's Q3 bottom line, the sharper-than-expected subscriber loss has dampened the sentiment.

The company's wireless ARPU (Average Revenue Per User) rose 5% from last quarter to Rs 163, marking a 10% increase from last year as per Motilal Oswal. However, the gains were offset by subscriber base decline.

"Vi’s overall subscriber base at 199.8 million, declined by a further 5.2 million QoQ (vs. 5.1 million net declines in 2QFY25, and higher than our expectation of a 4 million QoQ decline) due to churn remaining elevated post the tariff hikes," the brokerage house said.

In the last 6 months, the shares of the telecom company have declined by over 47% on both the bourses. Tough competition from other telecom giants coupled with burgeoning debt levels continues to take a toll on investor mood.

Even data usage per subscriber declined, albeit marginally to 14.5 GB/month from 14.7 GB/month, and remains significantly lower as compared to Reliance Jio and Bharti Airtel.