Vodafone Idea adds subscribers for first time since 2018, cuts losses in Q1

New Delhi: Vodafone Idea Ltd, India’s third-largest telecom operator, reported a strong April-June quarter, adding subscribers for the first time in a quarter since it became a merged entity, even as it cut its losses while growing revenue and operating profit, helped by network expansion and rising data consumption.

The telecom operator’s customer base rose to 193.1 million in Q1, from 192.8 million in the preceding quarter, marking its first quarterly net subscriber addition since the merger of Vodafone India and Idea Cellular in August 2018. However, on a year-on-year (y-o-y) basis, the subscriber base fell by 4.6 million from 197.7 million.

The Mumbai-headquartered company’s net loss narrowed to ₹3,754 crore from ₹6,608 crore a year earlier, significantly beating Bloomberg’s estimate of ₹5,391 crore. In the March quarter, the company had reported a net profit of ₹51,970 crore owing to a one-time accounting gain from the government’s adjusted gross revenue (AGR) relief.

Revenue from operations in Q1 FY27 rose 6% year-on-year (y-o-y) to ₹11,689 crore, also beating Bloomberg’s estimate of ₹11,499 crore, while quarterly Ebitda (earnings before interest, tax, depreciation and amortization) grew 9.1% y-o-y to ₹5,034 crore.

“Our robust Q1FY27 performance is a strong validation of our defined strategy and disciplined execution,” Abhijit Kishore, chief executive officer of Vodafone Idea, said in a company statement, adding that the company has already placed orders worth ₹9,000 crore related to network expansion as part of its capex plan.

Vodafone Idea’s capex for the June quarter stood at ₹1,930 crore, compared to ₹2,294 crore in the preceding quarter.

The telecom operator declared its results after market hours. On Monday, shares of Vodafone Idea ended 0.7% higher at ₹12.82 on the National Stock Exchange, compared to a 0.05% gain in the benchmark Nifty 50.

Lower losses in Q1

The reduction in losses was helped by lower total expenses, including interest costs, as well as a one-time gain of ₹1,816 crore from the fair-value adjustment of equity shares to be settled with the promoter entity, Vodafone Plc.

As of June end, the fair market value of such earmarked shares stands at ₹4,435 crore, which can be sold later and the proceeds will come to Vodafone Idea, as part of the settlement.

The improvement in bottom line was offset by a partial charge of ₹205 crore against a matter in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) pertaining to the department of telecommunications (DoT).

Fund-raising plan

Vodafone Idea’s earnings follow some relief in April, when the government slashed its AGR dues by ₹23,600 crore to ₹64,046 crore after recalculation, and deferred the bulk of its payments by 10 years, to be paid from FY36 to FY41.

Meanwhile, the company has been looking to raise bank debt of ₹35,000 crore. The timeline of the debt fundraise is crucial, as besides a ₹45,000-crore network expansion plan, Vodafone Idea has to pay ₹49,000 crore towards spectrum dues over the next three years, which would take its cumulative outgo to nearly ₹1 trillion.

So far, Vodafone Idea has secured funding of ₹6,400 crore, including warrants, fund & non-fund based facilities and remained engaged with lenders to close the overall funding plan.

“The ongoing conversation with the lenders gives us the confidence of successful closure of debt discussions. With all critical business parameters now moving in the right direction, our focus remains on execution and AI-led transformation across the organization,” Kishore said.

In May, the telecom operator put out an ambitious financial roadmap to generate and secure over ₹1.08 trillion in cash over the next three years.

As at June end, Vodafone Idea’s deferred payment obligation towards spectrum was at over ₹1.3 trillion. The company said the instalments payable against these obligations, as scheduled by June next year, is ₹9,259 crore.

The company also recorded ₹25,759 crore towards AGR dues, under present value accounting norms.

In addition, Vodafone Idea’s debt from banks stood at ₹211 crore, and it had cash and bank balance of ₹6,558 crore, aided by the receipt of part proceeds from warrant issuance during the quarter.

The group is confident of generating sufficient cash flow from operations to meet its obligations including spectrum and AGR dues payable over the next 12 months as and when they fall due, Vodafone Idea said in its financial statement.

Improved Arpu

In the June quarter, Vodafone Idea’s blended average revenue per user (Arpu) grew 1.7% sequentially to ₹177 a month, from ₹174 in the March quarter, driven by network upgrades, 2G to 4G/5G migration, and two extra billing days during the quarter. Its customer Arpu, excluding machine-to-machine (M2M) users, was at ₹195, up from ₹190 in the previous quarter.

To be sure, analysts at IIFL Securities in a note dated 7 July had expected that Vodafone Idea’s subscriber additions during the quarter would be led by M2M users — SIM cards used in devices or machines such as smart meters or vehicle trackers, as opposed to SIMs used in mobile phones.

By comparison, Reliance Jio’s Arpu stood at ₹215.6 a month at the end of June, while that of Bharti Airtel was at ₹264 per month.

Vodafone Idea added 1.8 million postpaid users during the quarter, taking its base to 31.9 million. Of its total base of 193.1 million users, the 4G/5G base was at 130.1 million. Comparatively, Jio’s total users stood at 533.3 million, while that of Airtel in India was at 492 million.

Telecom operators such as Bharti Airtel and Vodafone Idea have also been asking for tariff repair in the sector for some time. Market leader Reliance Jio, however, has been signalling confidence in organic Arpu growth.

In the company’s annual report for FY26, Kumar Mangalam Birla, non-executive chairman of Vodafone Idea, said the country’s Arpu remains among the lowest in the world.

“Periodic tariff adjustments are therefore essential if operators are to sustain investment and finance the rollout of next-generation networks,” he said.