Shares of Vodafone Idea were down on Tuesday despite the debt-ridden telco narrowing its quarterly loss and improving its unit metrics.

What Happened: Vodafone Idea reported a consolidated net loss of ₹6,432 crore for the first quarter of FY25, narrowing from the ₹7,840 crore net loss in the same period last year. The company's revenue from operations declined by 1.3% to ₹10,508.3 crore, down from ₹10,655.5 crore in the June 2023 quarter.

The average revenue per user (ARPU) rose 4.5% year-on-year to ₹146, up from ₹139. This increase was primarily attributed to changes in its entry-level plan and subscriber upgrades.

Vodafone Idea’s 4G subscriber base grew for the twelfth consecutive quarter, reaching 12.67 crore users, up from 12.29 crore users in the quarter. Its total subscriber base stood at 21 crore.

Looking Ahead: Regarding recent tariff hikes, Vodafone Idea said it is supporting entry-level users while progressively linking higher prices to higher usage, ensuring that changes in entry-level plans remain nominal. The telco also highlighted international roaming as a key focus area, expanding its footprint from 98 to 120 countries over the past year.

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"Post the recent equity raise, we are in the process of expanding our 4G coverage and capacity as well as the launch of 5G services. Some capex has already been ordered and is under execution, based on which we expect approximately a 15% increase in our data capacity and an increase in 4G population coverage by approximately 16 million by the end of September 2024,” said Vodafone CEO Akshaya Moondra.

All Eyes On Tariff and Debt: Moondra also mentioned that the company's current capital expenditure needs are being met through equity funds. Vodafone Idea is actively engaging with lenders to secure debt funding for its network expansion, which has a planned capex of ₹50,000 crore to ₹55,000 crore over the next three years.

"The recent tariff intervention is a step in the right direction for the industry to move towards better returns on investment, as well as to improve cash generation to support the large investment requirements. However, further tariff rationalization is needed for the industry to fully cover its cost of capital," Moondra added.

As of June 30, Vodafone Idea’s total debt from banks and financial institutions stood at ₹4,650 crore, with optionally convertible debentures totalling ₹160 crore. Its debt from banks and financial institutions was reduced by ₹4,550 crore over the past year from ₹9,200 crore in Q1FY24. The company's cash and bank balance was ₹18,150 as of June 30, 2024.

Price Action: Vodafone Idea’s shares slipped 1.19% to ₹15.82 in early trade on Tuesday after starting the session in positive territory.

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