Vodafone Idea is expected to narrow its loss in the March quarter as it reaps synergies from the merger of brands Idea and Vodafone completed in August last year in order to survive in an intense telecom battleground where it fights rivals Reliance Jio and Bharti Airtel.

Vodafone Idea’s average revenue per user (ARPU) is also expected to improve for the second consecutive quarter on the back of minimum recharge plans rolled out for users to stay on its network.

The company will announce its earnings for the March quarter today. Rival Jio posted a profit of 840 crore for the March quarter and Airtel’s profit rose 29% year on year to 107.2 crore because of a one-time gain of 2,022.1 crore and a tight control on sales and marketing expenses.

The operator’s topline has continued to remain under pressure after Jio’s entry in September 2016 brought down tariffs to rock-bottom.

However, analysts believe that a large part of tariff downtrading is now complete, therefore stability in revenue is likely, unless Jio initiates a new round of tariff war to accelerate its subscriber growth.

ICICI Direct Research expects Vodafone Idea’s ARPU to grow 6.7% quarter on quarter to 95, boosted by minimum recharge and shedding of low paying customers. The company’s ARPU was 89 in the December quarter and 88 in the September quarter. Despite the growth, the company’s ARPU is behind both Airtel and Jio.

“The company is expected to post a net loss of 4,540 crore. The key monitorables would be the progress on fructification of synergy gains and fundraising status," ICICI Direct Research said in a research note dated 9 April.

Vodafone Idea had incurred a net loss of 5,004.6 crore in the December quarter, compared with 4,973.8 crore in the September quarter. Before that, Idea and Vodafone competed as separate brands.

Motilal Oswal too expects Vodafone Idea to narrow its loss to 4,120 crore. “We expect revenue to remain flat quarter on quarter at 11,770 crore, as the uptick in APRU will be largely be offset by the decline in subscriber base and revenue dilution from interconnect usage charge," Motilal Oswal said in a report.

Vodafone India and Idea Cellular, who had announced their merger in March 2017, completed the exercise in August 2018 and are currently undergoing an integration exercise to create synergies which would bring down costs of operating networks.

The company has also completed a capital raising exercise through a rights issue of 25,000 crore to existing eligible equity shareholders. It is also simultaneously working on monetising its fibre assets apart from its stake in the joint entity of Bharti Infratel and Indus Towers which is close to completing their merger.

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