Vodafone Idea, India’s third-largest telecom operator, has narrowed its loss for the quarter ended December, aided by provision adjustments. However, operational pressures, including subscriber churn and high spectrum debt obligations, persist for the company.
During the December quarter, the telecom operator reported a net loss of ₹5,286 crore, compared to ₹6,609 crore in the same period last year. In the previous quarter, the company reported a net loss of ₹5,524 crore.
In its financial statement for the quarter, the company said it is confident of generating sufficient cash flow from operations to meet its obligations, including lenders, spectrum and AGR dues payable over the next 12 months as and when they fall due.
The narrower loss during the quarter was largely driven by exceptional items, including provision write-backs on remeasurement of settlement assets with its promoter Vodafone Group, amounting to ₹1,228 crore. In the absence of the same, Vodafone Idea’s losses would have expanded sequentially and narrowed marginally year-on-year.
The company’s revenue from operations increased 2% year-on-year and 1.15% quarter-on-quarter to ₹11,323 crore, also surpassing Bloomberg’s estimate of ₹11,297 crore. A marginal improvement in revenue can be attributed to the company’s network expansion and increased data consumption on the network.
‘Important inflection point’
“This quarter marked an important inflection point for the company with the positive resolution of key legacy issues. We are thankful to the government for offering a definitive, long-term and conclusive solution on the AGR (Adjusted Gross Revenue) matter. We also concluded the settlement of CLAM (contingent liability adjustment mechanism) receivable of ₹6,394 crore with the Vodafone Group,” said Abhijit Kishore, chief executive officer of the company.
Meanwhile, the company reported its quarterly results at a time when it had a breather from the government on payment of its adjusted gross revenue dues. The Cabinet on 31 December decided to freeze the company’s ₹87,695 in AGR dues as of December-end.
The government had approved a payment plan for the company to clear its frozen AGR dues over FY32-41. As per the Supreme Court orders in October and November, the government has also begun the exercise to reassess the company’s AGR dues. Upon completion of the exercise, the company’s final AGR amount could also be reduced, according to analysts and government officials.
After the AGR dues freeze, the telecom company’s total outgo towards AGR payments over the next six years, from March 2026 to March 2031, would be ₹744 crore, a maximum of ₹124 crore per year. It will also have to pay ₹100 crore annually over four years, from March 2032 to March 2035.
During the quarter, the company lost 3.8 million subscribers, taking its subscriber base to 192.9 million as of the end of December. In the previous quarter, the company’s subscriber base was at 196.7 million. In the year-ago period, the subscriber base was at 199.8 million.
The company’s average revenue per user (Arpu) grew 3% sequentially to ₹172 a month, led by consumer upgrades. In the preceding quarter, the company’s Arpu stood at ₹167. In comparison, Jio’s Arpu was at ₹213.70 at the end of December. Bharti Airtel is yet to declare its earnings for the December quarter.
In the December quarter, the company’s 4G/5G subscriber base improved to 128.5 million, as against 127.8 million in the preceding quarter. “As the company continues to expand its broadband coverage and capacity, this large subscriber base provides a great platform for the company to upgrade the balance 33%, voice-only customers, to users of data services and digital offerings,” it said in its quarterly report.
Vodafone Idea’s earnings before interest, taxes, depreciation and amortisation (Ebitda) came in at ₹4,816 crore, a 2.8% rise from the preceding quarter’s ₹4,685 crore and a 2.2% year-on-year increase.
The company said it is in talks with the lenders to secure debt financing to support its broader capex plans of ₹50,000–55,000 crore. Last month, the company announced that it raised ₹3,300 crore through secured non-convertible debentures, or NCDs. The fundraise was through Vodafone Idea Telecom Infrastructure Ltd, or VITIL, a subsidiary of Vodafone Idea.
Vodafone Idea incurred a capital expenditure of ₹2,252 crore during the quarter and ₹6,448 crore for the nine months ended December.
“One of the key milestones for the quarter was the successful NCD raise of ₹3,300 crore, despite an AGR overhang; a clear reflection of lender confidence in our ability to improve the business performance. Collectively, these developments have strengthened the trajectory of our debt discussions, which will enable us to execute our larger capex plan to strengthen the network and further elevate the customer experience,” Kishore said.
The proceeds from this issuance will be utilized by VITIL to repay past obligations to Vodafone Idea, enabling the telco to bolster its capital expenditure and support business growth.
Even as Vodafone Idea managed to secure a freeze on its AGR dues, the company has been burdened with huge dues. As of 31 December, the company’s deferred payment obligation (including interest accrued but not due) towards spectrum was at ₹1.25 trillion. This is in addition to the AGR dues, currently frozen by the government.
The company said, “(its) instalments payable, as scheduled, by December 2026, are ₹7,001 crore.”
Vodafone Idea’s outstanding bank debt (including interest accrued but not due) was ₹4,424 crore, and the instalments payable, as scheduled, by December 2026, are ₹1,126 crore, including interest thereon.
During the quarter, Vodafone Idea also took a hit of ₹159 crore due to recent changes in the labour codes by the government. The company said it assessed the financial implications of these changes, which have resulted in an increase in gratuity and leave liabilities arising from past service costs.
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