Vodafone Idea Q2: ARPU may rise QoQ amid subscriber churn, say analysts

Vodafone Idea Q2 preview: The stock of Vi has rallied 25 per cent over the past 6 months, marginally outperforming the BSE Sensex index, which gained 22 per cent during the period

Vodafone Idea Q2 preview: Debt-ridden Vodafone Idea (Vi) is slated to report its September quarter (Q2FY22) result on Friday, November 12, and analysts expect the telecom major to report a sequential growth in ARPU (average revenue per user). The quarterly performance, however, could be marred by subscriber churn, they say.
 

On the bourses, the stock of Vi has rallied 25 per cent over the past 6 months, marginally outperforming the BSE Sensex index, which gained 22 per cent during the period.

Here's what leading brokerages expect:

ICICI Securities

The brokerage expects the churn for Vodafone Idea to continue given its stressed balance sheets restricting network spends as well as recent tariff hike in the 2G segment, which, it believes, will drive SIM consolidation. 

"We consequently bake in around 6 million customer exits in Q2. We build in monthly ARPU growth of 6 per cent quarter on quarter (QoQ) at Rs 110, largely driven by tariff hike seen in 2G and postpaid segment," it said in a result preview report. 

Overall, the brokerage anticipates the consolidated revenues to grow 2.1 per cent QoQ at Rs 9,347 crore, up from Rs 9,152.3 crore in Q1FY22. EBITDA, at Rs 3,840 crore, is expected to grow 3.6 per cent sequentially driven by ARPU growth. 

"Reported margins are expected at 41.1 per cent, up 60 bps QoQ, and the company is expected to post a net loss of Rs 7,439 crore," it said. 

Vi's Ebitda stood at Rs 3,707.7 crore in the June quarter of FY22 and Rs 4,152.4 crore in Q2FY21. Ebitda margins, meanwhile, were 40.5 per cent and 38.5 per cent, respectively.

Emkay Global

Analysts here believe revenues could increase 2.5 per cent QoQ (down 13 per cent YoY) to Rs 9,381.2 crore, up from Rs 9,152.3 crore (Rs 10,791.2 crore YoY) on a 6 per cent jump in ARPU from mix improvement and the tariff hikes effected in July. 
 

"However, that could also lead to a softening of its subscriber base with a 10 million decline. After witnessing a slight contraction in the previous quarter, we forecast data subscriber additions of 6.1 million in the quarter," they said. 
 

Ebitda is expected to rise around 2 per cent QoQ and slip 9 per cent YoY at Rs 3,775.9 crore while margin is seen at 40.3 per cent. 
 

At the bottomline, the company’s loss is pegged at Rs 7,527.2 crore. The consolidated net loss was Rs 7,319.1 crore in Q1FY22 and Rs 7,218.2 crore in Q2FY21.
 

YES Securities

The brokerage believes Vodafone Idea is expected to report decline of 2 million subscribers QoQ, with growth in ARPU of 4 per cent QoQ driven by migration from 2G to 4G technology.
 

In absolute figures, revenue is seen at Rs 9,260.9 crore; Ebitda at Rs 3,860.5 crore; and net loss at Rs 7,165.1 crore.

Key monitorables

According to analysts, since the government has announced a relief package and doubts on the survival of the company for the next few years have been alleviated, going-forward, any update regarding fund-raising, and ARPU trajectory commentary will be the key triggers for the stock.