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(Photo: Reuters)
(Photo: Reuters)

Vodafone Idea Q4 preview: AGR payback and revenue growth plans need to be in sync

According to a consensus of brokers, the telco is expected to report a consolidated revenue of 11,692 crore, up 5.4% sequentially, and net loss of 4,610 crore

Mumbai: As Vodafone Idea gears up to announce its Q4 (Jan-March) quarter results tomorrow, all focus will be on the telco's plans to pull together finances for AGR payments.

According to a consensus of brokers, in Q4 Vodafone Idea is expected to report a consolidated revenue of 11,692.30 crore up 5.4% sequentially and net loss of 4,610.30 crore. Vodafone Idea has so far paid around 7,000 crore of its total AGR dues of 21,533 crore, which the company has estimated on its own. The government, however, pegs the dues at 50,000 crore.

Vodafone Idea reported a net loss of 6,438.8 crore for the quarter ended December 31st. Reported revenue was 11,089.40 crore.

“Vodafone Idea should not have any material cash in its balance sheet and we don’t foresee any bank lending to it at this juncture," said a ICICI Bank report on 19 June. However, the telco still has the option of UK-based Vodafone Plc making an additional payment of 6,700 crore as part of an 8,400 crore contingent liability plan. Further, completion of the proposed merger between Bharti Infratel and Indus Towers should aid the operator to garner funds, which has been delayed for the sixth time this year as the Infratel board is awaiting the apex court’s final decision on AGR payments.

Vodafone Idea is expected to report around 3-4% gains in average revenue per user (ARPU) during Jan-March to bring it up to 113. In Q4, Airtel’s Q4 ARPU expanded by as much as 14% QoQ to 154, compared to1.7% growth at Reliance Jio ( 130.6). Tariff hikes are expected to cause further low-ARPU subscriber exits from Vodafone Idea. As per Q3, the operator reported a subscriber base of 304 million but as per Trai reports for January and February it lost more than 7 million subscribers during the two months.

“Even if staggered payment is allowed for AGR dues, we estimate that the operator’s ARPU will need to cross 200 by FY23 (vs 109 in Q3FY20), for being able to service the government debt," said a 18 June report by IIFL Securities.

Thus the industry will be looking for management commentary on tariff, data usage and subscriber growth as it is highly likely that the apex court will push for some upfront payment even if they allow a 20-year staggered payment plan.

Since April, Jio Platforms has reported multiple investments from global VCs and Bharti Airtel has also been picking up investments in technology startups. In May, Vodafone Idea stocks soared because of a report in the Financial Times that speculated a possible investment by US technology giant Google in the telco which the operator denied. Thus, commentary on technology and digital ecosystem plans of the telco will be expected. The management has previously stated that they will focus on core telecom functionalities while any digital ecosystem measures will come through partnerships.

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