Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vodafone Idea Ltd (BOM:532822, Financial) successfully completed the largest FPO in the country, raising INR180 billion, which was subscribed about 7 times.
- The company raised further equity from promoters amounting to INR20.8 billion and preferential issuance of INR24.6 billion to Nokia and Ericsson.
- Vodafone Idea Ltd (BOM:532822) plans to increase its 4G population coverage by 16 million and data capacity by 15% by the end of September 2024.
- The company has a comprehensive fundraise plan, including INR250 billion in fund-based facilities and INR100 billion in non-fund-based facilities.
- Vodafone Idea Ltd (BOM:532822) has been recognized as a Great Place to Work in India and ranked 15th among the top 25 best companies to work for in India by Business Today.
Negative Points
- The company continues to face high churn rates, with a current rate of 4%, compared to peers at 2-2.5%.
- Vodafone Idea Ltd (BOM:532822) has been experiencing slower growth in 4G subscriber additions, which may be impacted by seasonal factors.
- The company has significant debt obligations, including INR2,095.2 billion in spectrum obligations and AGR liabilities.
- There is uncertainty regarding the outcome of the AGR case pending in the Supreme Court, which could impact financial stability.
- The company has yet to finalize its long-term contracts and 5G rollout plan, which may delay improvements in network quality and subscriber growth.
Q & A Highlights
Q: Can you provide an update on investments in the network after the recent funding? When can we expect improvements in network quality?
A: (Akshaya Moondra, CEO) Post our April fundraise, we have engaged with vendors and ordered quick upgrades. We expect a 15% increase in capacity and a 16 million increase in population coverage by end-September. Full improvements will take time as longer-term contracts are finalized.
Q: How have customers responded to the recent tariff hikes? Are there signs of down trading or consolidation?
A: (Akshaya Moondra, CEO) Initial trends are in line with previous hikes, with some down trading and longer recharge times. However, the entry price increase was minimal, so significant SIM consolidation is not expected. We are monitoring the situation closely.
Q: Can you explain the one-offs in the quarter's interest costs?
A: (Murthy Gvas, CFO) There were two one-offs: INR263 crores from the Supreme Court's order on RCLF and approximately INR650 crores from vendor settlements.
Q: Why are 3G BTS being shut down instead of being reformed to 4G?
A: (Akshaya Moondra, CEO) Most reformable 3G BTS have already been converted to 4G. The current shutdowns are due to additional spectrum being reformed, which doesn't reflect as new 4G sites but increases capacity.
Q: What is the expected CapEx for the remaining nine months of this fiscal year?
A: (Akshaya Moondra, CEO) We have a three-year CapEx guidance of INR500-550 billion. The next nine months' CapEx will depend on order finalizations and deliveries, with a focus on accelerating 4G coverage and starting 5G investments.
Q: How will you approach 5G monetization and pricing?
A: (Akshaya Moondra, CEO) We are monitoring the market. Initial 5G investments will focus on capacity where needed. Pricing decisions will be made closer to the launch, considering market dynamics and customer adoption.
Q: What ARPU uplift do you expect from the recent tariff hikes?
A: (Akshaya Moondra, CEO) The blended average price increase in ARPUs is around 17%. We expect two-thirds to three-quarters of this increase to translate into actual revenue growth, considering down trading and other factors.
Q: When do you expect the subscriber base to stabilize and start increasing?
A: (Akshaya Moondra, CEO) It's difficult to predict the exact timing, but we are confident that network investments will eventually turn around the subscriber trends. The pace of improvement will depend on market response to the enhanced network quality.
Q: What is the plan for increasing 4G coverage and the expected number of additional sites?
A: (Akshaya Moondra, CEO) We plan to increase 4G coverage from 1 billion to 1.2 billion in the next 18 months, translating to around 210,000 to 220,000 sites, up from the current 182,000.
Q: What is the status of the AGR case in the Supreme Court?
A: (Akshaya Moondra, CEO) The Chief Justice has indicated that he will look into the matter soon. We are awaiting a decision on whether the curative petition will be admitted for open hearing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
