MUMBAI : Telecom operator Vodafone Idea Ltd surprised the Street with Q3 revenue beating analysts’ estimates, but a closer look at several other financial parameters show that it will be an uphill task for the company to pay its huge liabilities to the government.

The company’s revenue was at 11,089.4 crore for the three months ended 31 December, up 2.2% from the September quarter. Lower subscriber usage metrics, such as minutes of usage and data consumption, indicate that its subscribers may shift to rival operators.

While the company’s reported average revenue per user (Arpu) was up from 107 in the past quarter to 109, its subscriber base was down from 311.1 million to 304 million during the period under consideration.

“VIL continued to underperform peers in revenue growth—quarter-on-quarter revenues were flat compared with a 5% sequential increase in adjusted cellular revenue for Bharti, and a 6.4% increase for Jio," said a report by Bank of America Global Research.

It added that the Ebitda (earnings before interest, taxes, depreciation and amortisation) margin at 30.8% missed the bank’s estimate of 33.5%, on account of higher network operating expenditure and a change in the inter connection user charge (IUC)—the cost paid by a mobile operator to another when its customers make calls to that network.

On 10 October, Vodafone’s competitor Jio had said that it would charge users 6 paise per minute for calls made to other networks to account for IUC.

Jio posted a net profit of 1,350 crore for the December quarter.

Vodafone Idea’s Ebitda from wireless operations in India grew 0.7% quarter-on-quarter to 3,420 crore, but the management said that the higher interconnect usage charges weighed.

Vodafone said it had lost 7.1 million customers, which was more than analysts’ consensus estimates of about 5.5 million.

During the same period Bharti Airtel added 3.6 million subscribers and Jio gained almost 15 million.

But it was in terms of general subscriber usage metrics where rival operators have moved ahead of Vodafone Idea.

While its average minutes of usage per user increased significantly from 583 minutes a year ago to 674 minutes, it continues to lag behind Jio (760 minutes) and Bharti Airtel (898 minutes).

Greater clarity on Vodafone Idea’s Q3 performance will be available post an analyst call, which the operator postponed ahead of the Supreme Court hearing on adjusted gross revenues.

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