Vodafone Idea is in the spotlight today (January 28). The debt-heavy telecom operator announced its Q3FY26 result on January 27. In its Q3 result, the losses narrowed sequentially, operating performance showed small improvements, and cost controls helped steady the ship.
Meanwhile the rising debt and subscriber losses continue to cast a long shadow. In the latest report, the brokerage house Motilal Oswal has kept a neutral stance on the stock.
According to the brokerage report, Vodafone Idea’s quarterly performance was supported by tighter cost control and a gradual improvement in average revenue per user, even as customer exits accelerated.
Let’s take a look at the what is the brokerage say on this stocks and what is the rationale behind it –
Motilal Oswal on Vodafone Idea: Revenue inches up, margins surprise on the upside
Vodafone Idea reported modest growth in revenue during the December quarter. According to the brokerage report, “Vodafone Idea’s overall Q3FY26 revenue came in at Rs 11,300 crore,” slightly higher than estimates. This growth was driven largely by tariff gains and better user mix, rather than an expansion in the customer base.
Operating profitability also came in better than expected. As per the brokerage report, “Reported EBITDA at Rs 4,820 crore was approx. 2% above our estimate,” helped by cost efficiencies and marginally higher revenue. Earnings before interest, tax, depreciation and amortisation (EBITDA) margins improved quarter-on-quarter.
Motilal Oswal noted, “Reported EBITDA margin expanded ~70 basis points quarter-on-quarter to 42.5%,” which came in ahead of expectations.
Motilal Oswal on Vodafone Idea: Losses narrow, but interest burden weighs heavily
Apart from the operational gains, Vodafone Idea remains deep in the red. According to the brokerage report, after adjusting for exceptional items, “Vi’s losses widened to Rs 6,360 crore,” mainly due to higher interest costs. While this was slightly better than estimates, it was still worse than the previous quarter.
Motilal Oswal in its report highlighted that rising interest costs remain a major drag, limiting the impact of operating improvements on the bottom line.
Motilal Oswal on Vodafone Idea: Debt pile grows, government dues remain a key overhang
One of the biggest concerns continues to be Vodafone Idea’s balance sheet. According to the brokerage report, “Reported net debt increased by Rs 3,000 crore quarter-on-quarter to Rs 2,03,000 crore.” In addition, the company still owes a massive amount to the government for deferred spectrum and adjusted gross revenue dues.
External borrowing also rose sharply during the quarter as Vodafone Idea raised funds through non-convertible debentures.
Motilal Oswal pointed out that debt servicing and funding visibility remain critical issues, especially as the company continues to depend on external support to sustain operations.
Motilal Oswal on Vodafone Idea: Average revenue per user improves, but subscribers continue to leave
On the customer front, there was some good news. According to the brokerage report, “Reported wireless average revenue per user was up approx. 3% quarter-on-quarter,” supported by better subscriber mix and tariff actions. Customer-level average revenue per user also improved sequentially.
As per Motilal Oswal, “Total subscriber base declined by 3.8 million quarter-on-quarter,” much worse than the previous quarter.
While postpaid users and fourth-generation and fifth-generation subscribers saw small gains, these were not enough to offset overall losses.
Motilal Oswal on Vodafone Idea: Network rollout accelerates, 5G footprint expands
According to the brokerage report, capital expenditure rose sharply as the company expanded tower installations and broadband sites. Fourth-generation population coverage improved steadily, and fifth-generation services were rolled out to more cities.
Motilal Oswal noted that Vodafone Idea has now expanded fifth-generation services to 43 cities, covering all priority circles.
Conclusion
Overall, Motilal Oswal report noted that while margins and average revenue per user show signs of stabilisation, subscriber losses, high debt and funding risks continue to weigh on the outlook.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.