India’s telecom sector is the second largest globally, boasting over 1.19 billion subscribers as of September 2024. With a staggering teledensity of 85.69%, it supports a robust digital economy and contributes approximately ₹3.36 trillion (US$40 billion) in revenue for the fiscal year 2024.
With a market capitalization of Rs 53,599.16 crore, the shares of Vodafone Idea Ltd were trading at Rs 7.67 per share, increasing around 0.39 percent as Vodafone Ideacompared to the previous closing price of Rs 7.87 apiece.
Matter Explanation:-
Vodafone Idea Ltd has announced a robust capital expenditure plan of Rs 50,000-55,000 crore over the next three years, aimed at bolstering its 4G network capacity and coverage.
According to a recent investor presentation, the business has already invested over Rs 2,000 crore on capital expenditure in the first half of FY25, resulting in a 14% increase in its 4G data capacity. The 4G population coverage also increased dramatically, with 22 million additional customers added throughout the period. Vodafone Idea intends to increase its investment in the second half of fiscal year 25 by an estimated Rs 8,000 crore for network development and service improvement.
Furthermore, the telecom operator hinted at the likelihood of further rate increases, stating that an increase in costs is required to provide appropriate returns and fund future investments. “Prices need further adjustment to generate reasonable returns,” Vodafone Idea claimed in the presentation.
Financial performance:-
Examine the company’s financial condition, revenue jumped by 10 percent from Rs 10,716 crore in Q2FY24 to Rs 10,932 crore in Q2FY25, and during the same time frame, net loss shrunk from Rs 8,738 crore to Rs 7,176 crore.
Strategic Initiatives:-
The company is making significant capex investments, with ₹13.6 billion spent in Q2FY25 and a projected ₹80 billion for H2FY25. Key initiatives include increasing 4G data capacity by 14%, adding 42,000 4G sites, and enhancing network speeds by 18%, improving coverage and indoor experience.
Market Initiatives:-
Recent tariff hikes boosted ARPU and revenue growth, with customer ARPU ex-M2M rising 7.8% QoQ. Despite losing 5.1 million subscribers due to increased port-outs to a competitor not raising tariffs, the company continued growing its postpaid segment with feature-rich offerings. A merger is underway.
Management comments:-
Management is optimistic about the company’s transformation and its competitive positioning in the market. They are confident in leveraging investments to drive improved performance and growth, particularly in the telecom sector, ensuring a strong future outlook and enhanced market presence.
Company snapshot:-
Vodafone Idea Limited provides pan-India voice and data services across second-generation (2G), third-generation (3G) and fourth-generation (4G) platforms. Its Vodafone Idea business services provide communication solutions to global and Indian corporations, public sector and government bodies, small and medium enterprises, and start-ups.
Written by:- Abhishek Singh
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