Vodafone Idea shares up 3% today; what MOFSL says post Q2 results

Shares of Vodafone Idea Ltd (VIL) climbed over 3 per cent in Thursday's trade after the telecom operator reported a narrowing of year-on-year net loss in the September quarter. Vodafone Idea’s overall revenue at was up 2 per cent YoY and was
largely in line with MOFSL's estimate, as tariff hike benefits were partly offset by continued subscriber base declines.

The reported Ebitda growth of 6 per cent YoY was 3 per cent above MOFSL's estimate, led by lower network opex and SG&A costs. The reported Ebitda margin inched up 160 basis points QoQ to 41.6 per cent and was 130 basis points above MOFSL's estimate. Losses at Rs 7,176 crore were, however, higher than MOFSL's estimate of Rs 7,000 crore, largely driven by higher net finance costs and higher D&A.

Following the Q2 results, Vodafone Idea shares climbed 3.39 per cent to hit a high of Rs 7.62 on BSE. MOFSL maintained a 'Neutral' stance on the stock.

"Vi has written to the DoT to waive off bank guarantee (BG) requirement worth Rs 24,700 crore (to be submitted from September 2024 to February 2025) to securitise spectrum installments. We believe Vi’s debt raise is also contingent on securing BG waivers," MOFSL said.

The brokerage said that Vodafone Idea's net debt (excluding leases, but including interest accrued and not due) increased by Rs 9,300 crore QoQ to Rs 2.12 lakh crore on dues repayment to
vendors/banks and also spectrum acquisition.

VIL, it said, owes Rs 2.23 lakh crore to the government for deferred spectrum (Rs 1.52 lakh crore) and AGR dues (Rs 70,300 crore).

Meanwhile, Vodafone Idea's capex increased to Rs 1,400 crore in Q2 from Rs 760 crore in Q1. The management has guided for Rs 8000 crore capex for H2FY25.

MOFSL said VIL's overall subscriber base at 20.50 crore was down 51 lakh crore QoQ against 25 lakh decline in Q1FY25. It was higher than MOFSL's expectation of 40 lakh QoQ decline, thanks to elevated churn post the tariff hikes.

"Similar to peers, Vi’s monthly churn also increased QoQ to 4.5per cent (vs. 4 per cent QoQ, an increase of 110 bps QoQ to 2.8 per cent for RJio and 40 bps QoQ to 3.2 per cent for Bharti Airtel) and remains a key monitorable," it said.