Vodafone Idea chief executive officer Akshaya Moondra on Tuesday said the company’s 5G rollout will become clear once there’s clarity on fund raising plans as well as monetisation of services.
“The challenge, which we see today is that there’s no monetisation happening. In fact, the way 5G is priced today it is actually resulting in discounting of 4G also because whatever is being used on 5G that is not counted at all,” Moondra said during the October-December quarter earnings call with analysts.
“After funding plans materialise, we will need around 6-7 months to rollout 5G, and…by then monetisation will be clearer than it is today. Our strategy will be based on that,” Moondra added.
While Vodafone Idea has still not launched 5G services, its peers, Bharti Airtel and Reliance Jio, have started services across most parts of the country, which they are offering at 4G tariff plans.
Vodafone Idea is gtrying to secure external funding, which has not materialised since long. Moondra did not give any update on the fundraise exercise, but said that talks to conclude the same are going on.
“As for funding discussions, these are in progress with investors and given the nature of these discussions, we will not be able to respond to any queries on this subject,” Moondra said. In August last year, the promoter likely to be Aditya Birla group had also committed to infuse Rs 2,000 crore into the company for meeting impending payment obligations, but Vodafone Idea is yet to receive that.
“That commitement still stays, they are also commited ultimately to provide this as equity funding but as things stand now, that will also be part of the overall equity raise,” Moondra said. In October, Moondra had iterated that the company was focusing to tie-up equity investments first, which was expected to be concluded by December 2023 end.
The telecom operator had lost 4.6 million mobile subscribers, taking its user base to 215.2 million at the end of December. The same happened owing to continuous migration of users to peers – Jio and Airtel, as well as Vodafone Idea’s increase in entry-level tariffs.
The operator reduced the validity of the Rs 99 plan to 15 days from 28 days in 16 circles now. “We continue to observe the space and will make further interventions as we move forward. Major impact of these interventions is reflected in this quarter (October-December),” Moondra said, adding that the company is focussing on getting more customers on unlimited plans to improve its average revenue per user (Arpu).
On the capital expenditure (capex) of the company going forward, Moondra said, “in Q4 (January-March) we still have fairly large debt servicing. In the next financial year Q1FY25, we will have to strike a balance between what we allocate to capex so that atleast we are making some investments which can enable us to improve our cashflows, while in parallel also paying to the vendors”.
The company’s capex spend for the October-December stood at Rs 330 crore. By December 2024, the company has an obligation to pay debt of around Rs 5,400 crore. The debt includes Rs 533 crore towards spectrum payment, Rs 3,200 crore bank debts, and repayment of optionally convertible debentures (OCDs) of Rs 1,600 crore.
Once the moratorium on regulatory dues is over, the company will have an obligation to pay around Rs 28,000 crore to the government in FY26. Vodafone Idea’s net loss for the October-December quarter narrowed to Rs 6,986 crore from Rs 8,738 crore in the preceding quarter. The company’s revenues from operations during the period fell 0.4% q-o-q to Rs 10,673.1 crore.
At the end of the October-December quarter, Vodafone Idea’s gross debt (excluding lease liabilities and including interest accrued but not due) rose to Rs 2.15 trillion from Rs 2.13 trillion in the preceding quarter. The gross debt comprises deferred spectrum payment obligations of Rs 1.38 trillion, AGR liabilities of Rs 69,020 crore that are due to the government, debt from banks and financial institutions of Rs 6,050 crore and optionally convertible debentures amounting to Rs 1,660 crore.