Vodafone Idea shares: What MOFSL says post Q3 results

MOFSL in its latest note on Vodafone Idea Ltd (VIL) said the December quarter results by the telecom operator were broadly in-line with its expectations, as tariff hike benefits continued to be offset by a decline in subscriber base. Capex jumped sharply, it noted.

MOFSL said VIL's reported losses stood at Rs 6,609 crore against its estimate of Rs 7,100 crore, largely driven by lower net finance costs and certain one-offs pertaining to vendor dues. It said teh reported revenue at Rs 11,117 crore was 2 per cent below its estimate.

Vodafone Idea's reported net debt (excluding leases, but including interest accrued and not due) increased about Rs 5,500 crore sequentially to Rs 2.18 lakh crore. The telecom operator owes Rs 2.27 lakh crore to the government for deferred spectrum and AGR dues. Vodafone idea's capex increased sharply to about Rs 3,200 crore from Rs 1,400 crore in Q2. The management has guided for Rs 10,000 crore capex for FY25 against Rs 5300 crore in the first nine months of the financial year.

MOFSL said Bharti Airtel continued to be the biggest gainer on revenue market share (RMS) in Q3FY25, gaining further 80 bps QoQ (up 225 bps YoY), as RJio lost 50 bps QoQ (down 70 bps YoY) and Vodafone Idea lost further 30 bps QoQ (and down 160 bps YoY) market share among three private telcos.

It noted that Bharti Airtel also gained 45 bps QoQ (up 105bp YoY) in subscriber market share (SMS), with R-Jio gaining 10 bps QoQ 50 bps YoY), while Vodafone Idea further lost 55 bps QoQ (and down 155 bps YoY). The brokerage kept its rating 'Neutral' on Vodafone Idea.

Vodafone Idea's wireless ARPU was up 5 per cent QoQ to Rs 163 against 4 per cent QoQ for RJio and 5 per cent YoY for Bharti Airtel. It was 1 per cent below MOFSL's estimate of Rs 165, on account of residual benefits of tariff hikes.

"VIL indicated that customer ARPU (excluding M2M) was up 4 per cent QoQ to Rs 173 (vs Rs 245 for Bharti). VIL’s overall subscriber base at 199.8m, declined by a further 5.2m QoQ (vs. 5.1m net declines in 2QFY25, and higher than our expectation of a 4m QoQ decline) due to churn remaining elevated post the tariff hikes," MOFSL said.