Vodafone Idea Q2 Preview: Reduced losses due to better ARPU and cost control

Vodafone Idea (Vi) is expected to post another weak quarter for Q2 2026, with subdued revenue growth as subscriber erosion continues and 5G-related costs weigh on profitability. According to an average of five brokers, Vi’s revenue is likely to grow at around 2% YoY and remain nearly flat sequentially, while losses could narrow to around Rs 6,600-7,077 crore.Kotak Equities expects Vodafone Idea’s revenue to grow 2.1% quarter-on-quarter, driven by a marginal increase in average revenue per user (ARPU), even as subscriber attrition continues. The brokerage is modeling a decline of 1 million subscribers at the end of the period to around 196.7 million, while ARPU could rise to Rs 169 per month, helped by rate adjustments and one additional day in the quarter.

Nuvama also sees revenue growth of just 0.5% quarter-on-quarter, supported by modest ARPU growth but pressured by a shrinking user base. The brokerage expects EBITDA margins to remain flat sequentially. “Key metrics include progress on 5G rollout, fundraising plans and updates on the AGR case,” the brokerage said.

Business performance likely stable

UBS expects a weak second quarter of 2026 for the telecom provider, due to a lack of price increases and continued subscriber losses. It estimates revenue and EBITDA growth of 2.1% and 4.2% annually, respectively, with sequential growth of 1.2% and 2.8%. UBS flagged downside risks to FY26 capex and said financing constraints could slow expansion. “We will monitor management commentary on fundraising and potential relief measures around AGR or spectrum rights,” the report said.

JM Financial expects a 0.8% quarter-on-quarter increase in revenue to Rs 11,100 crore and a marginal 1.1% quarter-on-quarter increase in reported EBITDA to Rs 4,660 crore. Pre-IND AS EBITDA, which reflects the company’s cash earnings, is likely to rise 0.9% quarter-on-quarter to Rs 2,200 crore. It expects net subscriber losses to narrow to 0.5 million this quarter, similar to the previous quarter, with around 1 million new mobile broadband (MBB) users, helped by continued network expansion.

Motilal Oswal also sees subdued momentum and expects 1% quarter-on-quarter revenue growth, with the benefit of one extra day offset by the continued decline in subscriber base. The brokerage expects EBITDA margins to contract by 30 basis points quarter-on-quarter to 41.5%. It estimates that ARPU will rise modestly to Rs 166, while total subscribers are expected to decline by around 1 million.

Losses may become smaller, but financing remains an important surplus. Analysts expect Vodafone Idea’s net losses to narrow modestly this quarter as operational efficiency improves and lower network costs offset financing costs. The company’s recent moves to control expenses, consolidate towers and reduce network overlap are starting to reflect in a more stable cost base.

Kotak expects a sequential EBITDA increase of 1%, highlighting that while operating leverage remains contained, the company’s cost control supports cash flow stability. JM Financial and UBS are also seeing gradual improvement in profitability metrics, helped by a healthier mix of high ARPU users and stable operating trends.

UBS noted that the delay in fund infusion could force Vodafone Idea to scale back its capital expenditure plan for FY26, further affecting its ability to compete with larger rivals Reliance Jio and Bharti Airtel.

Subscriber decline and ARPU trends

Most brokers expect Vodafone Idea’s ARPU to rise 1-2% QoQ, supported by premiumization and gradual migration to higher value plans. However, continued subscriber losses continue to limit the benefit of ARPU growth.

Vi’s ARPU is expected to be in the range of Rs 166-169, compared to Rs 165 in Q1FY26. Subscriber base could fall by 0.5 to 1 million users, continuing the downward trend as network gaps and delayed 5G rollouts cause customer churn.