Vodafone Idea (VI) is losing even more money. Options and possible strategies are narrowing with lower financial execution performance. A Dynamic India wants to keep a strong market player in telecom. Previous financial engineering leaves the Indian Government with a passive 35.8% ownership of VI. VI may need even more financial supports to meet its longer term investments.
EkaLore has been tracking VI’s performance. In the last year, losses per quarter (after tax) have grown from Rs 8738 crore (USD$1.05B) from Rs 7596 crore (USD$912M) in September ending quarter of 2022. The current quarter’s loss is larger than the June ending quarter’s Rs 7840 crore (USD$942M)– an increase of more than 10%. The subscriber base also shrank from 234.4M, in the quarter in 2022, to 219.8M – a drop of more than 6%, with 1.6M subscribers lost in the June ending quarter, and with losses continuing in the current quarter. 4G user climbed to 124.7M (up 3.4% in the quarter, 4.1M subscribers). Average Revenue Per User also climbed to Rs 142 from Rs 139 (June ending quarter), and up from Rs 131 (year ago quarter) – a growth of 8.4%. EkaLore’s previous analysis continues: “VI customers are less active, use less data, while paying the least with a low rate of increased revenue.” Operational expenses also grew by 2% lowering gross margin. Overall revenues grew 1% in the recent quarter.
A critical financial measure of Rs 2.127 lakh crore (USD$25.452B ) gross debt (primarily AGR fees (Rs 68180 crore, USD$8.2B), and spectrum dues (Rs 1.35 lakh crore, USD$16.21B), some fees under dispute come from 2015-2016) [excluding off balance sheet leases]. Interest expense and financing costs of Rs 6534 crore (USD$784.5M) in the quarter ended grew from Rs 6033 in the quarter ended September 2022 – growth of more than 8.3%. This compares with an investment in 5G deployment assets of only Rs 520 crore (USD$62.43M). Cashflow was critical enough for public statements to be issued of a backstop by one of UK Vodafone or Aditya Birla Group. Debt growth exceeding revenue growth rates and stalled capital investment are poor indicators for mid-term revenue growth.
VI needs many things -- not all within their current resources.
In the next release EkaLore will look at VI's strategy options and choices.
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