Turnover stable, ARPU increasing
Brokers broadly expect Vodafone Idea’s revenue to remain largely flat on a sequential basis, with marginal improvement due to a small increase in ARPU. Kotak Equities expects revenue to rise around 0.6% quarter-on-quarter (QoQ), supported by better ARPU, but largely offset by ongoing churn. Motilal Oswal also expects flat sequential revenue as the decline in user base offsets price increases.
ARPU is expected to improve slightly during the quarter, helped by continued 2G to 4G migration. Kotak Equities estimates ARPU at around Rs 169 per month, compared to Rs 167 in the September quarter. Motilal Oswal and Centrum Broking expect a similar trend, with ARPU rising around 1% QoQ to Rs 168-169. UBS is slightly more optimistic, estimating ARPU growth at around 1.4% quarter-over-quarter, but still sees subscriber losses as a major drag.
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The loss of subscribers continues
Subscriber churn remains the biggest challenge for the company. Kotak Equities expects Vodafone Idea’s subscriber base to decline by around four million QoQ to around 192.7 million by the end of the period, a sharper decline compared to the previous quarter. Motilal Oswal estimates a drop of about 1.5 million users, while Centrum Broking expects a subscriber loss of about 2 million, largely in the 2G segment. UBS also expects continued erosion in subscriber numbers, noting that while ARPU improvements benefit revenue quality, they are insufficient to offset the impact of ongoing losses in the user base.
EBITDA shows a modest improvement
On an operational level, brokers expect modest sequential improvement in EBITDA, driven by cost optimization. Kotak Equities expects reported EBITDA to grow by 1.7% quarter-on-quarter, while Motilal Oswal expects a smaller increase of 0.6%, with EBITDA margins expanding by about 15 basis points to about 42%. Centrum Broking sees a comparable margin improvement of approximately 18 basis points to 42%.
UBS is relatively more constructive on EBITDA, estimating a 3.1% quarter-on-quarter increase, taking Q3 EBITDA to around Rs 4,800 crore, supported by operational efficiencies despite weak revenue growth.
The losses are increasing
Despite some improvement at EBITDA level, net losses are expected to increase further due to high interest costs and limited revenue growth. JM Financial sees losses widening to around Rs 6,986 crore in the third quarter. Kotak Equities estimates a loss of around Rs 6,763 crore, while Motilal Oswal expects losses to rise to around Rs 6,700 crore.
Important monitorables
Management commentary on the financing plans, investment outlook and adjusted gross revenue (AGR) relief will be closely watched. UBS notes that uncertainty around AGR appears to be decreasing, which could improve visibility in the medium term. However, short-term pressures from subscriber losses and deferred rate increases remain significant risks.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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