- Vodafone Idea on Wednesday said that it had successfully demonstrated 5G Voice over New Radio with its partner Nokia in Gandhinagar, Gujarat.
- Recently, Vodafone Idea appointed SBI Capital Markets to negotiate the restructuring of loans that it is supposed to pay in the next four years, worth ₹20,000 crores to ₹23,000 crores.
- Its subscriber base has declined to 247.2 million from 253 million in the previous quarter.
Vodafone Idea on Wednesday said that it had successfully demonstrated 5G Voice over New Radio with its partner Nokia in Gandhinagar, Gujarat. With this Vi became the second Indian Telco to demonstrate 5G VoRN after Reliance Jio.
Vodafone Idea’s average revenue per user (ARPU) rose for the third successive quarter, even though it is cash strapped, has posted massive losses and has a huge debt to take care of. It was severely affected and has been incurring losses since Reliance’s Jio entered the telecom market.
Telecom operators are upgrading subscribers from 2G to 4G and are trying to reach more people. To do this, they have to invest regularly in networks to provide seamless coverage.
Vodafone Idea has a mounting debt burden and a string of losses and is unable to do so. Hence, it is losing subscribers to its competitors Bharti Airtel and Reliance Jio. it is now the smallest player in the three-player market.
Kumar Mangalam Birla stepped down as non-executive chairman of Vodafone Idea last year and was replaced by Himanshu Kapania.
Recently, Vodafone Idea appointed SBI Capital Markets to negotiate the restructuring of loans that it is supposed to pay in the next four years, worth ₹20,000 crores to ₹23,000 crores.
Earlier, the Government had to buy a 35.8% stake in the company to give financial support after the promoters refused to infuse further capital into it.
As far as its Q3 results are concerned, its net losses widened to ₹7,231 crores in Q3FY22 from ₹7,132 crores in Q2FY22. Its ARPU rose by 5.2% to ₹115. Its capital expenditure stood at ₹1050 crores, which is much lower than Bharti Airtel’s capital expenditure of ₹4600 crores.
Its subscriber base has declined to 247.2 million from 253 million in the previous quarter. There was a marginal increase of 0.8 million customers in the 4G segment which is key to its business.
It hopes to receive cash from tariff hikes as there is no concrete detail about its capital expenditure plans or next fundraising.
“Without significant fundraising, we think VIL’s network investments and 5G rollout would remain constrained, at least in the near term, leading to further market share erosion,” said Nomura’s analysts.
Analysts believe that if the telco can’t raise capital soon and invest in 4G and 5G networks, the subscriber churn rate will be high, and an improvement in ARPU won’t mean anything as the overall revenues will be very low.
Sumeet Bagadia, Executive Director at Choice Broking had earlier stated on January 2022 that “One can initiate a long position in Vodafone Idea at CMP of ₹14 or a fall in the price till ₹13 levels can be used as a buying opportunity for the upside target of ₹20 to ₹25, while the support is placed at around ₹10 levels, which could be considered as a stop loss on a closing basis.”
He added that the telecom stock may go up to ₹28 to ₹30 levels as 5G rollout is expected to give some support to telecom stocks.
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