The key gain for Bharti was the 10 per cent jump in its 4G subscriber base in the quarter, compared with a 1 per cent rise for Vodafone Idea.
While Bharti’s overall data subscribers are 9 million more than Vodafone Idea, its 4G customer base is 31 million more than the latter, fetching it higher realisations per customer.
Though its operating performance was weaker than Bharti’s, Vodafone Idea’s revenue growth was a robust 6 per cent on a sequential basis. The revenue increase was lower than ARPU increase because of a 4 per cent dip in customer base. Vodafone Idea
is the only major player to report a fall in overall customer base. The other competitor, Jio, reported a 5 per cent increase.
The impact of higher revenues and post-merger synergies was positive with operating profit jumping 28 per cent to Rs 4,380 crore. This did not percolate to the net level, given Rs 6,000 crore of exceptional items —including accelerated depreciation, increase in licence fee and spectrum usage charge payable to the Department of Telecommunications and bank guarantees for one-time spectrum charges. A 16 per cent increase in interest quarter-on-quarter (QoQ) to Rs 4,000 crore, too, added to overall costs, leading to a reported loss of Rs 11,643 crore.
While Vodafone Idea spent Rs 10,000 crore on capex in FY20, the firm will find it difficult to increase this in FY21 to catch up with competitors, given rising debt. Net debt rose 12 per cent to Rs 1.13 trillion on a sequential basis, with over three quarters of it being deferred spectrum liabilities.
Analysts at Motilal Oswal Financial Services believe the company needs a 50 per cent hike in prices to generate operating profit of Rs 25,000 crore, which will be sufficient to service debt and fund capex plans. However, a lot depends on the outcome of the AGR case. Deferred payment of the dues, especially over a 20-year period, is vital, along with an improvement in cash flows for the company to survive.