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Vodafone Idea, formed as a merger between Vodafone and Idea Cellular, published its financial reports on 12th November 2021. The results beat the market estimates as the consolidated net loss of the company shrunk to 1.2% year-on-year (YoY). The consolidated net loss amounted to Rs.7132 crores in Q2  FY22 compared to Rs.7218 crores in Q2 FY21 and Rs.7319 crores in Q1 FY22.

The gross revenue was recorded at Rs.9406 crores after a 2.8% quarter-on-quarter (QoQ) growth from Rs.9152 crores reported in the first quarter of the current financial year. However, the company experiences a 12.8% YoY fall in the gross consolidated revenue against the Rs 10,791 crore revenue that Vodafone reported in Q2 FY21.

The EBITDA also fell 7% YoY from Rs.4152 crores in Q2 FY21 to Rs.3863 crores in Q2 FY22. In sequential terms, however, the company posted a 4.2% QoQ growth in the EBITDA which was recorded at Rs.3708 crores last quarter. 

This element of surprise as a sequential growth in the operating performance is attributed to the growth that the company witnessed in its The Average Revenue Per User(ARPU) rose 4.8% QoQ to amount to Rs.109 in the quarter under review.

The EBITDA margin improved 26 basis points on a YoY basis and 6 basis points on a QoQ basis to stand at 41.1%. 

The operating expenses fell 16.5% from Rs.6639 crores in the second quarter of the last financial year to Rs.5544 crores in the second quarter of the current financial year. Sequentially, however, the operating expenses increased from Rs.5445 crores in the last quarter.

After the markets closed, the shares of Vodafone Idea stood at Rs.10.25 after witnessing an intraday jump of 4.1%. The last dividend that the company had declared was on 28th April 2016 when a dividend of Rs.0.60 per share was announced.

Vodafone Q2 Results – Hits

    • 1.2% YoY reduction in the consolidated net loss, from Rs.7218 crores in Q2FY21 to Rs.7132 crores in Q2FY22.
    • 2.6% QoQ fall in the consolidated net loss, from Rs.7319 crores to Rs.7132 crores
    • 2.8% QoQ growth in the consolidated revenue, from Rs.9152 crores to Rs.9406 crores
    • 4.2% QoQ jump in the EBITDA, from Rs.3708 crores to Rs.3863 crores
    • 4.8% QoQ growth in ARPU, from Rs.104 to Rs.109
    • 26 basis points YoY improvement in EBITDA margin from 38.5% to 41.1%. 6 basis points QoQ improvement from 40.5% to 41.1%
    • 16.5% YoY fall in the operating expenses, from Rs.6639 crores in Q2FY21 to Rs.5544 crores in Q2FY22
    • Blended churn in subscriber base fell to 2.9% against 3.5% in the last quarter which was also the 4-quarter high figure for the company
  • Vodafone Idea 4G’s business saw sequential growth in its subscriber base, from 112.9 million in Q1FY22 to 116.2 million in Q2FY22

Misses for Vodafone Results

  • 12.8% YoY reduction in the consolidated revenue, from Rs.10,791 crores to Rs.9406 crores
  • 7% YoY fall in the EBITDA, from Rs.4152 crores to Rs.3863 crores
  • The subscriber base fell to 253 million users compared to 255.4 million users recorded in the last quarter
  • Operating expenses increased on a quarterly basis from Rs.5445 crores in the last quarter to Rs.5544 crores in the said quarter

What the management says

Commenting on the results, the company stated that it had taken pricing initiatives during the second quarter to improve its ARPU. This was done in accordance with its line strategy. The entry-level prepaid price was increased from Rs.49 to Rs.79 in a phased manner. Moreover, the tariff rates in some postpaid plans were also increased.

The company also mentioned that it welcomed the Government’s reform package which targets various industry concerns and provides immediate relief for the financial stress in the telecom sector. The company mentioned that it has improved its 4G subscriber base driven by superior data and voice experience on Vi GIGAnet.   

Other things to know

  • The company’s gross debt was recorded at Rs.1.9 lakh crores out of which Rs.1.1 lakh crores were the deferred spectrum fees. Rs 64,000 crore is payable to the Government for AGR  dues while Rs 22,000 iw owed to banks and financial institutions. 
  • Concerns on the sustainability of the business continues to cloud Vodafone even though management has vehemently denied a case for liquidation.
  • Vodafone is in talks with SBI for a loan and has been asked to provide a turnaround plan
  • Vi GIGAnet is considered to be the country’s fastest mobile network as testified by the high rankings in Ookla and TRAI.
  • The company added 10,800 4G FDD sites, mainly by reframing its 2G and 3G spectrums. This increased its 4G coverage and capacity and in Q2 FY22, the company’s overall broadband site count was recorded at 450,481 against 447,114 in Q1 FY22.
  • The company is engaged in cost optimization and has achieved 80% savings in the quarter under review.
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