Tag: Vodafone-Idea

Revenue growth of Indian telecom companies slows to a two-year low

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In the past quarter, the performance of telecom companies has been a cause for concern. The top three players in the Indian telecom market, namely Bharti Airtel, Reliance Jio, and Vodafone Idea, experienced a significant decline in revenue, reaching a near two-year low.

On a quarter-on-quarter basis, the revenue growth was a modest 1 percent, marking the slowest growth seen in the past seven quarters. Compared to the previous year, the growth was only 10 percent. The main reason behind this sluggish growth is barely any uptick in the Average Revenue per User (ARPU).

The last significant price increase in the prepaid category occurred in November and December of 2021, over a year and a half ago. Consequently, the full benefit of the 20 percent price increase has already been realised, resulting in stagnant average revenue per user figures for all these telecom companies in the current quarter on a sequential basis.

To revive revenue growth, it is essential to consider a price increase in prepaid 4G tariffs. If telecom companies want to see a positive turnaround, a tariff increase is necessary.

Among the three major players, Reliance Jio experienced slightly better growth, with a 1.7 percent increase on a quarter-on-quarter basis. However, when comparing year-on-year figures, both Reliance Jio and Bharti Airtel show similar numbers.

Another significant aspect to note is the capital expenditure (capex) spend by Vodafone Idea, which has dwindled to Rs 3,360 crore. This marks the lowest capex spend for Vodafone Idea since its merger in 2018-2019. Moreover, Vodafone Idea’s capex spend is only about 7-12 percent of its peers. In comparison, it accounts for about 7 percent of Reliance Jio’s capex and approximately 12 percent of Bharti Airtel’s capex in India. This significant divergence in capex raises concerns about potential market share losses for Vodafone Idea.

Over the past several quarters, Bharti Airtel and Reliance Jio have been steadily gaining market share, with each experiencing remarkable growth of around 2 percent over the last two years. However, the question arises whether this trend will continue.

To summarize, two key takeaways from the telecom sector are the slowdown in revenue growth in the March quarter, marking the lowest figures in the past two years for the Indian mobile wireless space, and the significantly reduced capex spend by Vodafone Idea, which raises concerns about further market share losses compared to its peers, Bharti Airtel and Reliance Jio.

Disclosure: RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.

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Jio, VIL pitch for Satcom spectrum allocation through auction, Airtel opposes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While the satellite industry has unanimously demanded spectrum allocation through administrative methods, major telecom firms Reliance Jio, Vodafone Idea, and Bharti Airtel offered divergent views to sector regulator Trai.

The comments on a consultation paper on spectrum assignment for space-based communication by the Telecom Regulatory Authority of India were made public on Friday.

Reliance Jio and Vodafone Idea (VIL) have suggested that the spectrum for satellite communication services should be allocated through auction, while Bharti Airtel has opposed it. Reliance Jio has submitted that spectrum assignment between space-based and terrestrial networks must maximise public good and serve the greatest number of people.

“There is no better method than free and fair auctions to achieve this goal. Auctioning spectrum is the most transparent method of spectrum assignment and allows service providers to decide on their technology, be it terrestrial, satellite, or any other,” Reliance Jio said.

It also said that the Supreme Court has unambiguously declared that the right to use such spectrum can only be transferred through a transparent auction and only the apex court can alter this policy on spectrum assignment.

VIL said the spectrum from 27.5 GHz to 29.5 GHz (including 27.5 GHz to 28.5 GHz) should be put to a fair and transparent auction in line with the Supreme Court Judgment of 2012 and the principle of same service same rules.

Bharti Airtel said that the auction of satellite spectrum will put Indian players at a disadvantage in comparison to the global competing operators, who simply pay an administrative fee for the resources required for providing the same service in other global markets.

Also Read: Vodafone Idea Q4 | Telco posts a loss of Rs 6,419 crore, revenue up 3% to Rs 10,352 crore

“Airtel is concerned that auctioning the satellite spectrum and creating an exclusiveness will create barriers for competition as competitors may block access to it by bidding and winning partial or full spectrum in spite of having no such global allocation, and make satellite systems redundant and severely hamper the emerging space ecosystem in the country,” it added.

The company said that the auctioning spectrum and then creating a sharing mechanism is self-defeating. “It is akin to bringing an intermediary between the spectrum licensor and user licensee: There is no need to create a middle-entity (an intermediary) between the spectrum licensor…the satellite operators,” Airtel said.

It added that such an intermediary will have to initially buy the spectrum from the DoT and then, through a mandatory sharing mechanism, offer the same spectrum to actual satellite spectrum users.

“This will bring in needless complexities since user satcom players will have to stitch multiple sharing arrangements together with different spectrum winners or owners,” Airtel said.

Space industry body Indian Space Association (ISpA) said any step towards the auction of the spectrum for satellite services will represent a retrograde step away from fulfilling these objectives. “The features of satellite spectrum make them unsuitable for an auction process,” ISpA said.

Disclaimer: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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Payment made by Vodafone Idea is for dues from January 2023, past dues still pending: Indus Towers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indus Towers has recognised its exposure to Vodafone Idea as revenue in Q4FY23 earnings. The latest earnings print reads, Vodafone Idea has been paying an amount equivalent to monthly billing since January 2023. Detailing the reason behind revenue recognition, Indus Towers Says, “It is done on the basis of straight lining of rentals over the contractual period”.

This revenue recognition is of importance as Indus Towers in December 2022 quarter, had recorded an impairment charge of Rs 492.8 crore relating to the revenue equalisation assets up to September 30, 2022, for Vodafone Idea and presented it as an exceptional item in the consolidated statement of profit and loss. According to the company, allowances for doubtful receivables are at Rs 34.8 crore as of March 2023 against Rs 2,270 crore for December-ending quarter.

It is important to note that the payment being made by Vodafone Idea is for dues from January 2023. For outstanding till December 2022, it has failed to meet the payment schedule, saying its funding plan did not materialise. To cover part of this dues, Indus Towers has a secondary pledge on shares held by one of the customer’s promoters and there is a corporate guarantee provided by the customer’s promoter. Indus Towers says, “‘These securities could be triggered in certain situations and events in the manner agreed between the parties. However, these securities are not adequate to cover the total outstanding.”

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Vodafone Idea in its results for the quarter and nine months ended December 31, 2022, had indicated that its ability to continue as a going concern is dependent on its ability to raise additional funds as required, successful negotiations with lenders and vendors for continued support and generation of cash flow from operations for settling its liabilities as they fall due.

For March-ending quarter Indus Towers has reported earnings largely above estimate with margin climbing back above 50 percent after three quarter. The stock on the back of this, opened 3 percent higher in Wednesday’s session.

In the December ended quarter, Indus Towers reported Rs 708 crore net loss and raised concerns over Vodafone Idea’s dues.

Jefferies says uncertainty may not be over with falling market share. Also, tariff hikes and fund infusion (if any) can be the key to continued payments to Indus Towers. The brokerage upgrades its recommendation to ‘Hold’ with a revised target price of Rs 155 due to a pick-up in growth and better-than-expected free cash flow conversion. However, further upside in the stock is unlikely as it believes Vodafone Idea’s cashflow pressures are unlikely to resolve.

Indus Towers share was trading flat on the exchanges today at noon.

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Vodafone Idea shares gain 10% after Kumar Mangalam Birla returns to the board after 20 months

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of debt-ridden telecom operator Vodafone Idea Ltd (VIL) surged nearly 10 percent in intraday trade on Friday after Kumar Mangalam Birla returned to the company’s board after 20 months.

On Thursday, Vodafone Idea Ltd announced that it has appointed Kumar Mangalam Birla as a non-executive and non-independent director of the company with effect from April 20, 2023. Birla is the chairman of the Aditya Birla Group, which owns a 32 percent stake in Vodafone Idea Ltd.

The move is subject to approval from shareholders.

In February 2023, the government cleared the conversion of over Rs 16,133 crore interest dues of Vodafone Idea into equity. Equity shares of the face value of Rs 10 each will be issued to the government at the same price.

The relief for the telecom player came as part of the reforms package announced by the government in September 2021.

Birla reiterated to CNBC-TV18 last week that Vodafone Idea will be launching its 5G services soon. Birla had said this in an earlier interview in October 2022 but a timeline has not been shared yet.

Vodafone Idea has been losing subscribers steadily as its competitors Bharti Airtel and Reliance Jio have launched 5G services already in the country. Since April 2021, the company has lost over 4.24 crore subscribers. The 12-month period ending December 2022 alone saw subscriber-base erosion of 2.42 crore.

The company reported a net loss of Rs 7,990 crore for the third quarter that ended on December 31, 2022.

Shares of Vodafone Idea are trading 6.6 percent higher at Rs 6.45. The stock is up 13 percent from its 52-week low of Rs 5.7.

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Vodafone Idea appoints Kumar Mangalam Birla as non-executive director

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Debt-ridden telecom operator Vodafone Idea Ltd (VIL) on Thursday, April 20, said it has appointed Kumar Mangalam Birla as a non-executive and non-independent director of the company with effect from April 20, 2023.

The appointment is based on the recommendations of the Nomination and Remuneration Committee and the board of directors of the company, it said in an exchange filing.

Birla is the Chairman of the Aditya Birla Group, which operates in 36 countries across six continents. He is a chartered accountant and holds an MBA degree from the London Business School.

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In February this year, the government approved the conversion of over Rs 16,133 crore interest dues of Vodafone Idea into equity. Equity shares of the face value of Rs 10 each will be issued to the government at the same price. The relief for the company came as part of the reforms package announced by the government in September 2021.

“The total amount to be converted into equity shares is Rs 16133,18,48,990. The company has been directed to issue 1613,31,84,899 equity shares of the face value of Rs 10 each at an issue price of  Rs 10 each,” the company said.

Earlier, VIL had said with the conversion of dues into equity, the government will get around a 35 percent stake in the company.

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Shares of Vodafone Idea Ltd ended at Rs 6.06, down by Rs 0.020, or 0.33 percent on the BSE.

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JPMorgan wary of telecom stocks as it doesn’t expect further tariff hikes till the next general elections

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The competition in the telecom industry has intensified in recent years, with multiple players vying for market share. This competition has led to a pricing war, with telecom companies offering lower tariffs to retain and attract customers. However, this has resulted in shrinking margins for telecom companies, which makes it difficult for them to invest in new technologies and infrastructure.

Another factor that is hindering the growth of the telecom sector is the delay in tariff hikes. Ankur Rudra, ED-Technology and Telecom Research at JPMorgan stated that he does not expect any tariff hikes until the general election, which is likely to take place in the coming year.

“We do not expect any tariff increases in the near term. Till there are elections, we wouldn’t expect any tariff increases,” he said.

This delay can further impact the financials of telecom companies, as they continue to face rising costs without any increase in revenue.

Despite the challenges, Rudra believes that a tariff hike is inevitable and could potentially happen by the end of 2024.

“The earliest possible tariff increase is probably at the end of 2024. We have historically seen tariff increases taking place at the end of calendar years, so most likely it will happen at the end of 2024 given there are elections in the coming period,” he said.

Also Read | Vodafone Idea stares at bleak future, possibility of “shutting shop” due to heightened competition, says brokerage

He emphasized that telecom companies need to focus on innovation and improving their services to attract customers and increase revenue.

According to him, the telecom sector is currently facing several hurdles that make it a cautious investment for the time being.

“We are quite cautious on the telecom space in India across the board. The main reason being an increase in capex which probably will not see any return anytime soon,” he said.

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Rudra believes that one of the primary reasons for this caution is the rising capital expenditure in the 5G infrastructure. The deployment of 5G technology requires significant investments, and telecom companies are expected to spend billions of dollars on building the necessary infrastructure. This increase in capex is a significant challenge for telecom companies, as it can put a strain on their financials.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Jio, Airtel, Vodafone Idea prepaid plans compared — here’s how the three telcos stack up

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Prepaid plans are arguably the most popular as they are very convenient across all age groups and demographics. All three major private telecom service providers in the country — Bharti Airtel, Reliance Jio, and Vodafone Idea (Vi) — offer a dizzying array of prepaid plans, spanning different validity periods, bundled with various offers and offering different daily data usage caps.

We’ve broken it down for you so that you don’t have to scratch your head, wondering which plan is the best for you.

Prepaid plans with validity of 30 days or less

As seen in the table above, of all the various sub-monthly  recharge plans the three telcos offer, only two recharge packs are in common — the Rs 239 pack and the Rs 299 pack. While Airtel and Vi offer similar value — 24 days and 1 GB/day for the Rs 239 plan and 28 days and 1.5 GB/day for the Rs 299 plan, Jio  offers 28 days of validity in both cases and more data — 1.5 GB/day for Rs 239 and 2 GB/day for Rs 299.

All three telcos also offer recharge packs for the same daily data cap for longer validity periods, including up to a year.

Annual recharge packs

Here too, Reliance Jio appears to edge ahead, offering higher data for a lower price.

Next, we will look at three-month recharge packs, as they hit the sweet spot — offering long validity at a reasonable cost.

Plans with validity of 84 days or more

While one might wonder why Vi has two different recharge packs offering the same validity and data packs, the Rs 1,066 pack also throws a three-month Disney+ Hostar subscription for free.

So there you have it — all the best prepaid recharge plans offered by the three major private telcos in India, collated in one place. Take your pick.

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Need to make investments to improve cash flows, clear vendor dues: Vodafone Idea CEO

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Debt-ridden telecom operator Vodafone Idea needs funding to make investments and vendor dues will be cleared once it starts generating cash from the investments, a top official of the company said on Wednesday.

Vodafone Idea (VIL) CEO Akshaya Moondra during the company’s earning call said that the experience on 5G is not much different for consumers at present unless the network is made ubiquitous.

“It is very clear that we need to get funding to make investments and improve our operating cash flows to be then able to improve our vendor payment situation. Currently, we are prioritizing all payments which are essential for the continuation of operations,” Moondra said.

He said all vendors have been very supportive during the difficult period that the company has been going through.

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“As we get the funding and start making investments, as we see cash generation from operations is going up, that will be the basis of our starting to clear the backlog,” Moondra said.

He said the company is in the advanced stages of discussion with various network vendors for the finalisation of our 5G rollout strategy.

“5G is an important development. 5G is a part of our plan. It is clear that we will be starting a little late compared to the competition. I believe 5G is evolving. “While 5G offers much better speed, really speaking from a consumer perspective when you measure it on Speedtest, it is visible. If you try to see your experience, it is not very different. It will also require some ubiquitous coverage of 5G,” Moondra said.

He said as soon as the funding is in place, the company will expedite the rollout of 5G.

Moondra said the company is engaged with banks for funding which could not progress earlier as the main requirement of banks was the conversion of the government’s interest dues into equity.

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He said the tariff hike is required in the industry as the present level of realisation is not enough to cover the cost of capital invested in the industry.

Debt-ridden telecom operator Vodafone Idea has reported a widening of its consolidated loss to Rs 7,990 crore for the third quarter that ended December 31, 2022. The company had registered a loss of Rs 7,234.1 crore in the same period a year ago.

The consolidated revenue from operations of Vodafone Idea (VIL), however, increased by 9.29 percent to Rs 10,620.6 crore from Rs 9,717.3 crore in the December 2021 quarter.

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The total gross debt (excluding lease liabilities and including interest accrued but not due) as of December 31, 2022, stood at Rs 2.22 lakh crore, comprising deferred spectrum payment obligations of Rs 1.39 lakh crore and adjusted gross revenue liability of Rs 69,910 crore that are due to the government.

The debt from banks and financial institutions stood at Rs 13,190 crore.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Vodafone Idea Q3 Results: Net loss widens to Rs 7,990 crore, ARPU rises to Rs 135

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Debt-ridden telecom operator Vodafone Idea on Tuesday reported a net loss of Rs 7,990 crore for the third quarter that ended December 31, 2022. In the September quarter, the company posted a net loss of Rs 7,595.5 crore.

In the December quarter, total revenue stood at Rs 10,620.6 crore during the period under review, up 0.1 percent against Rs 10,614.6 crore in the September quarter.

At the operating level, EBITDA jumped 2 percent to Rs 4,180.8 crore in the December quarter of this fiscal over Rs 4,097.5 crore in the September quarter.

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EBITDA margin stood at 39.4 percent in the December quarter as compared to 38.6 percent in the September quarter. EBITDA is earnings before interest, tax, depreciation, and amortisation.

The average revenue per user (ARPU) for the quarter stood at Rs 135 as compared to Rs 131 in the second quarter of FY22.

Akshaya Moondra, CEO of Vodafone Idea, said the company has issued equity shares to the government of India recently, consequent to the conversion of the interest related to the deferment of spectrum and AGR dues into equity. Separately, our board has approved issuance of Optionally Convertible Debentures amounting to Rs 16 billion to ATC India.

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On a YoY basis, ARPU witnessed strong growth of 17.4 percent aided by tariff hikes and migration of subscribers to unlimited plans. The 4G subscriber base continued to grow and with 1 million 4G customers added in Q3, the 4G subscriber base now stands at 121.6 million, though the overall subscriber base declined to 228.6 million vs 234.4 million in Q2FY23.

The company continues to see high data usage per broadband customer at 15.1 GB/month with the total data traffic witnessing sequential growth of 0.8 percent.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow