Voda Idea Q1 loss may narrow; fund raising, ARPU growth plan eyed: Analysts

Vodafone Idea Q1 Preview: Voda Idea's fundraising plans and commentary on average revenue per user (ARPU) trajectory ahead will remain key monitorables for experts and investors alike

Debt-laden Vodafone Idea may have narrowed its net loss during April-June quarter of FY22 (Q1FY22), expect analysts, as subscriber churn remained contained, and amid marginal blow to revenue.

The telecom services provider, which is set to report its Q1 earnings on Saturday, August 14, had incurred a massive loss of Rs 25,460 crore in the year-ago period (Q1FY21) and Rs 7,022.8 crore in Q4FY21 (March quarter of FY21).

That said, fundraising plans and commentary on average revenue per user (ARPU) trajectory ahead will remain key monitorables for experts and investors alike.

“We continue to highlight that a fund-raising announcement and government support are crucial for the survival prospects of the company, especially considering cash and cash equivalents of just Rs 350 crore at FY21-end,” highlighted analysts at Emkay Global in a pre-result report.

Here’s what key brokerages expect:

ICICI Direct

The brokerage is baking-in nearly 4 million customer exits on a quarter-on-quarter (QoQ) basis, compared with 2 million exits in Q4FY21, as subscriber addition would have been hit given the lockdown impact amid Covid second wave. That said, the churn may have been limited due to completion of network integration, it says.

“We expect overall revenues to decline 4 per cent QoQ at Rs 9,216 crore from Rs 9,607.6 crore while Ebitda is pegged at Rs 3,830 crore, down 13 per cent QoQ from Rs 4,408.7 crore, as Q4FY21 had one-off cost benefit of Rs 450 crore,” the brokerage said. Reported margins are expected at 41.6 per cent, down 430 bps QoQ.

Revenue and Ebitda (earnings before, interest, tax, depreciation, and amortisation) in the previous-year period were Rs 10,659.3 crore and Rs 4,098.4 crore, respectively.

Overall, the company is expected to post a net loss of Rs 6,674 crore.

Emkay Global

This brokerage forecasts a 2.6 per cent sequential and 12 per cent yearly cut in revenues at Rs 9,361.5 crore due to free recharges and a 4 million tempering in subscriber base and 1 million hit on data subscriber base.

After adjusting for the one-off item in the March quarter, Ebitda could decline 10.2 per cent QoQ and 3.4 per cent YoY to Rs 3,960.4 crore, it said. Net loss is seen at Rs 6,628.8 crore.

JM Financial

Sounding cautious, the brokerage builds-in nearly 7 million subscriber losses for VIL – both due to migration of subscribers to other networks as well as consolidation of SIMs. Consequently, they expect ARPU to decline to Rs 105 in Q1FY22, compared with Rs 107 in Q4FY21 and Rs 114 in Q1FY21, due to the impact of free recharges and lower usage.

It expects flat (0.5 per cent rise) in Ebitda at Rs 4,431.8 crore and net loss at Rs 5,888.9 crore due to operating expense (opex) saving initiatives.

Phillip Capital

This is the only brokerage that expects net loss to widen QoQ to Rs 7,110.4 crore due to higher interest expense on adjusted gross revenue (AGR) dues recognized.

However, it expects revenue and Ebitda to rise 3.2 per cent QoQ (down 7 per cent YoY) and 1.2 per cent QoQ (up 8.9 per cent YoY), respectively, at Rs 9,917.1 crore and Rs 4,462.7 crore.

Ebitda margin is seen at 45 per cent relative to 45.9 per cent QoQ and 38.4 per cent YoY.

Kotak Securities

Analysts here expect revenues to fall 15.5 per cent on year and over 6 per cent on quarter to Rs 9,011.4 crore. Besides, Ebitda and Ebit are estimated to drop 2.5 per cent and 3.3 per cent YoY to Rs 3,996 crore and (-) Rs 1,814.5 crore, respectively.

At the bottomline level, net loss is pegged at Rs 6,560.2 crore and ARPU at Rs 102 per month.