Vodafone Idea posts first user growth since 2018, funding gap persists
Vodafone Idea halted years of customer defections in the June quarter, but the Indian telecom's survival still depends on securing delayed capital to close a massive network gap with dominant rivals.
Vodafone Idea added 0.3 million subscribers in the June quarter, its first customer growth since the 2018 merger that created the company, bringing its total base to 193 million. Revenue rose 6% year-on-year to ₹11,689 crore, beating Street estimates, while Ebitda climbed 9% to ₹5,034 crore.
The improved top line was driven by a 7.3% jump in average revenue per user (Arpu) to ₹177, though an adjusted net loss of ₹5,358 crore underscores the distance to actual profitability. Management argues there is significant room for Arpu expansion, noting that migrating 2G users to 4G could add ₹230-240, while unlimited plans could contribute another ₹30-35.
However, the headline subscriber addition masks underlying pressures. Growth was partially driven by machine-to-machine connections, which doubled over the past year but are Arpu-dilutive, dragging the blended figure down from a standalone customer Arpu of ₹195. The company continues to lose prepaid users, a traditional revenue stronghold.
The operational stabilization means little without the capital to sustain it. Vodafone Idea needs ₹45,000 crore over three years to upgrade its network, with ₹9,000 crore in orders already placed. It has secured only ₹6,400 crore so far, leaving a critical funding gap that threatens to derail the rollout and any lasting recovery.
Rivals Bharti Airtel and Reliance Jio dwarf Vodafone Idea in scale and financial flexibility. Airtel's India wireless Arpu stands at ₹264 with 680 million subscribers, while Jio reports ₹216 and 530 million. Unlike Vodafone Idea, both generate sufficient cash flow to self-fund network investments and customer acquisition.
The stock has more than doubled over the past year to ₹13, yet analysts warn the valuation is detached from fundamentals. “VIL has arrested subscriber losses and improved ARPU and churn, with focus now shifting to capex deployment and delayed debt fund raise. We tweak our FY27E/28E Ebitda by -2.6%/-0.8% as we push forward FY27 tariff hike by a quarter,” said Nuvama Research.
Motilal Oswal Financial Services noted that the market is pricing in a flawless execution that remains highly uncertain: “Vi’s significant valuation premium (~26.6x Sep’28 pre-IND AS EV/EBITDA), compared to its larger and more profitable peer (~10.5x for Bharti India), caps the upside from potential benefits of an acceleration in network roll-out.”
