Vodafone Idea Limited
Q1 FY26
Call date · August 18, 2025
1 · Management Commentary
Key Positives
- 5G services expanded to 22 cities across 13 circles, with further rollout planned in all 17 priority circles by September 2025.
- 4G population coverage increased by ~7% to ~84% as of June 2025 (from ~77% in March 2024).
- 4G data capacity expanded by ~36%, driving a ~24% improvement in 4G speeds.
- Subscriber decline restricted to 0.5 million, ~90% lower than ~5 million in Q2 and Q3 FY25, marking the strongest performance since merger.
- Consumer ARPU increased 14.9% YoY to Rs. 177; 4G subscribers reached 127.4 million.
- Data traffic grew 10.4% YoY overall and 11.2% per 4G subscriber.
- Significant enterprise wins, including a 10-year contract for 5 million smart meters with Genus Power Infrastructure Ltd.
Key Negatives
- Capex trajectory slower than previously indicated; full acceleration of Rs. 500–550 billion capex plan contingent on securing new debt funding.
- Net debt remains high; funding constraints continue to limit pace of network expansion.
- VLR subscriber base declined by 2.6 million QoQ, with management citing seasonal weakness and migration effects.
Forward Guidance
- Capex plans: Rs. 50–60 billion targeted for H1 FY26; broader Rs. 500–550 billion over three years dependent on bank funding.
- 5G coverage to expand to all 17 priority circles by September 2025; ongoing 4G densification.
- Continued focus on digital services, including Vi Movies & TV, Vi Finance (personal loans, FDs, credit cards), and enterprise solutions.
- Ongoing engagement with lenders for debt funding; exploring non-bank funding sources to maintain capex continuity.
- Strategic partnerships (e.g., AST SpaceMobile for satellite-based broadband, Aditya Birla Capital for financial products).
- Revenue and margin outlook: Management confident of continued improvement in subscriber metrics and ARPU, supported by network investments and new offerings.
2 · Q&A Highlights
Q 1 (Composite): How is the reduction in churn and subscriber loss linked to network expansion, 5G rollout, and pricing interventions?
A (Management):
• Subscriber loss reduced from ~5 million to 0.5 million as coverage and capacity improved.
• Churn reduction is driven by a combination of expanded 4G/5G coverage, new product offerings (e.g., Non-Stop Hero), and better customer service.
• 5G rollout, while not the sole factor, positively impacts customer perception and experience, especially in major cities.
Q 2 (Composite): What is the status and outlook for capex deployment, and how is it impacted by funding constraints?
A (Management):
• Rs. 50–60 billion capex for H1 FY26 on track; most to be completed by September 2025.
• Further significant capex requires new funding; current investments have made 4G/5G coverage competitive in priority markets.
• Beyond September, capex will be limited to internal cash generation until new funding is secured.
Q 3 (Composite): What is the adoption rate and impact of 5G among subscribers?
A (Management):
• 60–70% of subscribers with 5G devices in coverage areas have adopted 5G within ~2 months of launch.
• 5G introductory offer available on Rs. 299 plan (1.5 GB/day); not limited to 2 GB/day plans.
• Device market share for 5G has increased since launch.
Q 4 (Composite): How are 4G additions and overall subscriber trends evolving post-tariff hike and network expansion?
A (Management):
• 4G subscriber additions have resumed, with 1 million added in Q1 FY26 despite overall subscriber loss.
• Performance varies by market; areas with new investments see better growth, but execution and distribution also play roles.
Q 5 (Composite): What is the outlook for enterprise business growth given capital constraints?
A (Management):
• Enterprise business (Techco transition, IoT, cloud, managed services) is a key focus and not significantly constrained by capital, as investments are smaller and opportunity-driven.
• Major IoT wins (e.g., smart metering) and new service launches (CCaaS, Google Workspace) position the company well for growth.
Q 6 (Composite): What are the current levels of AGR and deferred spectrum liabilities?
A (Management):
• As of June 30, 2025: Deferred spectrum payment outstanding at INR 119,000 crore; AGR liability at INR 76,000 crore; total INR 195,000 crore.
Q 7 (Composite): What is the status of funding discussions with banks and other sources?
A (Management):
• Bank discussions progressing post-government equity conversion and credit rating upgrade; banks seeking clarity on AGR.
• Company also exploring non-bank funding to maintain capex momentum in the interim.
3 · Other Key Numbers
- Q1 FY26 revenue: Rs. 110.2 billion (up 4.9% YoY)
- Cash EBITDA: Rs. 21.8 billion (up 3.7% YoY)
- Reported EBITDA: Rs. 46.1 billion (vs. Rs. 42 billion in Q1 FY25)
- Depreciation & Amortisation: Rs. 54.7 billion (Rs. 39.3 billion ex-IndAS116)
- Net Finance costs: Rs. 57.5 billion (Rs. 46.9 billion ex-IndAS116)
- Capex spend (Q1 FY26): Rs. 24.4 billion
- Bank debt as of June 30, 2025: Rs. 19.3 billion
- Total broadband site count: ~516,200
- 4G sites per 4G location: 2.7x (June 2025) vs. 2.3x (March 2024)
- Massive MIMO sites deployed: ~13,100
- Small cells deployed: >12,300
- International roaming packs: available in 144 countries (up from 129); unlimited data/calls in 40 countries (up by 11)
- AI engine flagged over 450 million SMSes as spam (Jan–June 2025)
- Postpaid Vi Max Family Plan: Rs. 871/month, 120GB data pool, Netflix included
- IoT contract: 10-year, 5 million smart meters with Genus Power Infrastructure Ltd
- MSME digital advisory platform: 4th edition launched; 76% of MSMEs plan to increase cybersecurity investments (MSME Growth Insights Study 2025)
- VLR subscriber base declined by 2.6 million QoQ
- 4G subscriber base: 127.4 million (Q1 FY26)
- ARPU: Rs. 177 (Q1 FY26, up 14.9% YoY)
- Data traffic growth: 10.4% YoY overall, 11.2% per 4G subscriber
- Deferred spectrum payment outstanding: INR 119,000 crore (June 30, 2025)
- AGR liability: INR 76,000 crore (June 30, 2025)
- Total government-related liabilities: INR 195,000 crore (June 30, 2025)