Vodafone Idea Limited (IDEA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q1 FY27 Results Conference Call hosted by Vodafone Idea. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijit Kishore from Vodafone Idea. Thank you, and over to you, Mr. Kishore.

Thank you, Darwin. Good afternoon, and a very warm welcome to all of you. Thank you for making the time to be here today. On 10th August, 2026, our Board of Directors adopted the unaudited results for the quarter ending June 30th, 2026. All the results-related documents are available on our website, and I hope you have had a chance to go through the same. Our robust 401-FI27 operating and financial performance has been an endorsement of our well-defined strategy, Superior Execution. Let me share our progress on the key strategic initiatives, after which I'll hand over to Pagers, who will share the details on the company's financial plan. I would like to begin by updating you on seven critical business parameters that we had mentioned in the last earning call as well. I am happy to share that all seven of these critical business parameters are now trending positively. Our revenue improved 6% Y-on-Y to Rs. 11,689, while cash EBITDA demonstrated double-digit growth of 13.5% to that. We also increased our subscriber base to 193.1 millionth of customers vis-à-vis last quarter. Net subscriber edition, which turned a cornered February last quarter, has continued its trajectory. We delivered our first quarter of positive net subscriber edition. Since merger, we will continue this momentum. Our churn reduced by 24 basis points year-on-year this quarter. We remain focused to reduce our churn with a sustained network investment as well as get a competitive share of quality cross-addition as we expand our coverage and enter new geographies. We also added nearly 3,000 unique broadband towers during the quarter and over 15,600. New size over the last 12 months, expanding our 10-India 4G coverage 87%. On 5G, it's substantial. All the seven critical parameters, which is all moving in the right direction, moving on. Funding front. Second, I am delighted to share that we were assigned CRYSL A-Stable rating by CRYSL in May 2026, followed by a credit rating upgrade to ICRA A-Stable by ICRA in June 2026. The ratings were assigned and upgraded by CRYSL and ICRA, respectively, to certain long-term bank facilities considering the positive development over the last few months. I also want to update on the broader financial architecture that supports our CapEx plan of rupees 45,000 crores over the next three years. This architecture is built on three cohorts. First is a consortium of public sector banks led by SBI with six to seven participating banks. Second cohort is of the Indian private banks, and the third one is of the ECB with foreign banks. We remain meaningfully engaged with our lenders across these three cohorts and have made substantial progress with them. I am happy to share that we have successfully raised our first tranche of funding Rs. 6400 crores, including partial proceeds of Rs. 1183 crores from warrants and debt proceeds, including non-funded base facilities through ECB and Indian Private Bank. We have already placed orders for Rs. 9,000 crores to CapEx till now, which also includes the CapEx undertaken in Quarter 1, FY27. This is these orders have already come in. Thank you. and other partners, which will be executed as we move forward. We are hopeful of closing the discussion with the PSU banks led by SBI, as well as continue work on other debt-raised streets. Next are differentiated product offerings and market initiatives. Our focus is on enriching customers' digital lifestyle with experiences that extend well beyond just voice and data. Towards this, we partnered with Spotify to offer our Postpaid VMAX subscribers a premium music streaming experience. For prepaid subscribers, we launched VMAX. Thank you. It's a place of adoption.

The revenue for the quarter was 11,689 crores. Driven by ARPU expansion. The EBITDA for the quarter 2034 growth, improving by 9.2%. Over 120 basis points from 41.8. The cash is with them. The cash EBITDA improved despite the rollout of over 15,600 broadband sites during the last 12 months, reflecting a focus on overall cost management. Depreciation and amortization expenses and the net finance cost for the quarter, Rs. 5,467 crores and Rs. 4,925 crores, respectively. Excluding, in fact, Rupees 3,860. The benefit of these 1,816... A fair value adjustment of the year-marked shares from PLAP. This re-measurement of fair value will be undertaken every quarter, and its impact adjusted in exceptional items till the shares are liquidated. Due to the supply-side issues arising from the geopolitical constraints, the CapEx investment for the quarter was Rs. 1930 crores, and as ABG's has guided, we intend to accelerate our network expansion towards which we have already placed Thank you. has reduced to 211 crores. 1,726 crores as of June of the prior year. Reduction of 1,715 crores. $6,508. Our recent credit ratings Reiterating this quarter's results reflect our growth momentum, translating into improving Highlight B, Net Customer Edition, for the first time since the merger. With that, I have the call back.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Sanjesh Jain with ICICI Securities. Please go ahead.

Thank you. Thanks for the opportunity. A couple of questions from ICIDA visit. First on the subscriber transition and the benefit of the network, how should we see from here on, particularly on the mobile customer, How should it translate? And what has been the trend in the circles now that we have implemented CAPEX in last one year? Have we seen those circles turning positive in terms of mobile subscriber net ad?

Yeah, so if you have more questions, then I can take all of them, or do you want to respond right now?

No, no, I will tell you. So second on the R2, we have been bridging the R2 gap versus the peers. How much more do you think it is possible before the transition of 4G and 5G really helps push the R2 growth? How much more is it possible by improving the efficiency within the network to take the R2 to, say, next one year, what are we targeting? That's number two. And number three on the CAPEX, we said that we have put up 9,000 crores of CAPEX. We have already invested close to 2,000 in this quarter. By spending this 9,000 crores this year, where do we see our network capacity in terms of expansion from the current level?

Okay, so thanks, Sanjesh, for asking that question. Okay, so let me take the first one on the subscriber edition. The answer is clearly yes. We look at it at different cohorts on all these 17 markets that we have defined for ourselves, and obviously where they are putting the network in the rural as well as in the urban markets. This club with the 5G, wherever we have rolled out, we clearly see a difference on the customer attentivity, which is what I spoke of, of 0.24% that we see over the last year, which is improving. This is visible across the circles. in the last one year, and The journey continues, and we still have... And the 5G sites. So that's the one. Second is, obviously, as we said, this is the first quarter for us on the subscriber edition to be posted, largely led between postpaid and end-to-end. Repaid is also turning leave, and we see a clear and significant increase. So it's all pointing in the right direction. As far as the ARCO is concerned, you know, as I said, we've kind of... This is obviously organic RPU, which is where we have a differentiated opportunity between the mix of customers of between a 2G and a 4G, 5G, as well as unlimited voice and unlimited data customers, and then between the unlimited data and the nonstop hero, which is a differentiated offering. We continue, and we hope to see that, you know, we will continue the similar trend a little better than where we are today on the ARCO of 195 at a blended level. On the CapEx, you know, our guidance on the CapEx continues. We are looking at the 45,000 crores for the next three years, as we have said. The first quarter, because of the supply chain advance, we saw a little bit of a 2,000-odd crores of the CapEx spend. As I indicated, we have already placed the order. of the CAPEX which has been deployed. We intend to deploy all of these. Less than two quarters. So the intensity continues. We are looking at deploying roughly around three and a half thousand sites a month on an average here on.

Three and a half thousand, you said, is the tower count or the...

The tower count on the 4G.

Power count on the 4G. Thanks. Abhijit, one question on the postpaid. Now that the Fastlane 5G is becoming a reality in India, do you see risk to your postpaid customer?

On the contrary, Sanjeev, I will say that we have seen an increase in our postpaid acquisition as well as retentivity. So as we speak, you know, we don't see that as a challenge. However, we continue to provide experience, and we have enough capacity to provide the experience to our customers, not only post, but post.

Depending on the 5G, how many towers we have done, I know you said 200 plus cities, but some critical number in terms of tower coverage, that would be helpful.

Yeah, so we are now, as we speak, we are over 16,000 sites in 5G, and we intend to kind of cover another 200 plus cities over the next two quarters.

That's very helpful. Thanks for visit and best of luck for the coming quarters.

Thank you, Sanjesh. Thank you.

Thank you. Our next question comes from the line of Aditya Suresh with Macquarie. Please go ahead.

Thank you. So two items. So first, if you could speak to us about your cash EBITDA targets, which you articulated a few months back, if you could reiterate what the guidance is or what the ambition is over the next three years, and if you could break that down for us in terms of how much of that is going to be the top line versus margin expansion. That's the first item. The second item is a clarification. Could you clarify what is the position of NetNet as of this quarter? That's one. And two is within your subscriber number, how much of these subscribers are in that M2M category? Thank you.

Sorry, Aditya, if you could just repeat the second question. You said what is the net addition?

So, what is your current position? And also, if you can clarify on your M2M subscribers. Thank you.

Okay, so I'll take the first one first, and they just, you can chime in. So on the cash EBITDA, you know, we had a 9,200 crore of cash EBITDA last year. We are at 2,75 this year. I think our guidance for the next three years was 3x of the cash EBITDA, which is obviously built with certain assumptions on the organic as well as some of the price corrections which will happen. That guidance continues, and we are moving in the right direction as far as that is concerned. So that was obviously built over a customer as well as on the art. So that guidance continues, clearly. On the top line, when we had looked at the total cash EBITDA of 3x, we had taken a guidance of a CAGR of around 16.8% for three years, which also continues as we speak. On the net debt, as Tejas said, we started the... 311 crore from the NCD, which we had raised in the month of December last year. That's 3,300 crore, so that's the only debt that we have. On the M2M, I think it's a good story. We're kind of seeing a good traction in all the four verticals that we play, be it automatic meter reading, vehicle tracking, connected car, as well as point of sale. We see a good traction, and... Over the last one year, we have actually doubled our net addition as far as the machine-to-machine is concerned, and that trajectory is a very strong trajectory. We have a pretty dominant position in the connected car space as far as the IoT is concerned.

Just to clarify, this is just total net debt for the quarter. We are ending at 3,489 crores. That's the two constituents that Abhij has mentioned, and that was 4,001 crores in the last quarter.

And can you just clarify that the subscriber base in itself on M2M?

We don't give the breakup, Aditya, on that. As I indicated, that the post-paid as well as the M2M is tracking pretty well. Pre-paid is where we have a job to do, and that's what the focus is now. As we roll out more and more sites, we are reaching to the places where we don't cover today, and that's the focus area. Thank you. Thank you, Aditya. Thank you.

Our next question is from the line of Gaurav from Axis. Please go ahead.

Yeah. Hi, I just had a couple of questions. One is on your network OPEX, that number has sort of remained broadly stable in the last few quarters, even though your network has obviously been a sharp improvement. So how should we sort of think about this going ahead?

Sure. Thanks for the question. I think we had similar question also in the previous quarter. So I think two ways to answer. I think as we look at our cost efficiency effort, we will look at bringing efficiency into a network cost. So yes, while you said we have been toning out additional sites, we have been able to, in a way, manage the overall network cost. Having said that, we have seen some inflationary challenges from diesel, etc. So you might see a little bit of that. But overall, I would say we've been able to...

The next question is on your roaming access charges. That has seen a sharp increase. So is there anything related to some intracircle roaming or how should we sort of think about this?

No, I think nothing to do with the intracircle roaming and nothing structural. You know, like any business, there are a few lines of business that we have. We have a wholesale line of business, which in this quarter we have seen a better participation, and that comes with a higher roaming cost. If you will see the same line in the prior quarter, that was a little bit lower. So on an average, if you see the increase is not that high. And again, it's a cash accretive business, slightly higher cost and a lower percentage margin, But an overall cash-aggrative business that we were able to participate higher in this quarter.

Thank you. Thank you, Gaurav.

Thank you. Our next question is from the line of Balaji Subramanian with IIFL. Please go ahead.

Yeah. Congrats on a decent set of results and thanks for taking my question. I just had one. So, if I look at the postpaid additions, they are at a multi-quarter high. But I can also see that a lot of that is probably led by N2M. So, if I look at the TRAI number, 2 million N2M subscribers were added in the June quarter. So that means there was a slight dip in the post-fade subscriber base XM2M in the June quarter, which is probably after four quarters of positive additions on the post-fade XM2M front. So, you know, has it got anything to do with, you know, I know, you know, this question was also touched upon earlier, but has it got anything to do with the priority plan, Airpail Fastlane, you know, that was recently launched by Bharti and, you know, do you see that as a risk because, you know, postpaid is where, you know, Vodafone has been fairly strong. And we also saw that in the quarter that went by Bharti's post-paid additions crossed the 1 million mark for the first time. So, how would you kind of plan to face off this challenge? That would be my only question.

Yeah, no, thanks, Anadi, for asking that question. No, so we have not seen, as I said, even to Sanjay, we have not seen any dip in the postpaid business. Even the net addition for us in postpaid has been consistently over the last six to eight quarters been positive, and it's growing. There's no dip that we have seen at all. As far as the M2M is concerned, clearly there is an increase in quarter one over the last quarter, which is where you see the increase in the M2M part. Both these businesses are a pretty stable business and a net addition positive business for us. So we don't see that. That's one. Second, as I said, our focus from the retail stores... As far as this business is concerned, I would not want to comment on what On the contrary, we are adding...

Got it. Thank you, and all of us.

Thank you, Valerie.

Thank you.

Our next question comes from the line of Saurabhanda with Citigroup. Please go ahead.

Yeah, thank you for the opportunity. My first question was on the funding that you spoke about. You've raised funds of 6,400 crores. Now, of this, if 1,200 crores is the upfront warrant money, which had already come in June, could you just tell us a bit more about this balance of 6,200 of incremental funding? Is this mainly, I mean, how much of this is debt versus non-fund based? And is the source of debt, is it ECBs or is it Indian banks?

Yeah, so thanks, thanks, Ayus, for asking that question. So we've got the 11.83 crores, which is a partial part on the warrant, and we have been able to raise, as I said, in the three cohorts. This is primarily from the ECBs and the Indian private bank. And this is a mix of both debt as well as the non-funded facility. I can't give you the split, but it is a split between both of them. And there is a part of the ECB as well in this.

Okay, so... So, you had cash on books of 6,600 in June. So, to this, should we be adding this 5,200 to look at how much visibility you have in terms of how much you can spend over the next few quarters, even without, say, bank debt funding? Is that the right way to think about it?

Yeah, I think that's largely the right way to think about, which is why we said when we have placed orders of close to 9,000 crores or 9,100 crores, as Abhijit said, that is also leveraging the opening cash balance that we have in the business.

Okay, got it. And my second question is, again, on M2M. So, just to give you some numbers here. So, on postpaid, you've reported a growth of 1.8 million subscribers quarter on quarter. And as per TRAI, your M2M subscribers are up by 2 million quarter on quarter. So, if you subtract M2M, you get a slight dip in postpaid, I think, which is what some of the other participants were also talking about. So it's still... Are we looking at this the right way, or are there some end-to-end subscribers which are prepaid and not postpaid? I mean, we just wanted to understand this better.

No, I don't think there is any pre-paid subscriber as far as the M2M is concerned. They're all post-paid subscriber. It could be a timing gap because, you know, there are certain businesses which are the bootstrap business. So that could be the only delta that you could have. Otherwise, as I said, whether it is in the gross acquisition or the net edition, there is no structural challenge that we find in the business.

Okay, that's great. Thank you for the clarification.

Thank you. Our next question is from the line of Hardik Goyal with Union Mutual Fund. Please go ahead.

Hi, sir. Thanks for this opportunity. Sir, my question is, is there a talk between you and BSNL for tower and infra sharing? And if so, will that be more accurate to your margin than your already mentioned guidance? Thank you.

I mean, we already have, Ardhik, some relationship with BSNM, where we do the tower sharing with BSNM, but that's the one that we are doing right now. Other than that, there's no other tower sharing as we speak. Thank you.

Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Our next question is from the line of Kishan with Dam Capital. Please go ahead.

Hi, sir. Thanks for taking the question. So just one question from my end. Sir, the ARPU growth that you've reported for the customer ARPU growth, is it possible for you to bifurcate the same between 2G to 4G upgrades, between international roaming, trip-it to post-it? Is that possible?

We normally don't have it, but I can give you a little bit of a flavor on that to say that between a customer who is a 2G to a 4G customer, you typically see an upgrade value of an ARPU of roughly around 230 to 240 rupees. Between unlimited data customer, which is a quota customer, the way we call it, a 1.5 GB customer, when you migrate to a nonstop hero, which is a truly unlimited, you see a delta of 30 to 35 rupees. So I think that's the kind of range that can give you a flavor of what's the kind of ARPU arbitrage that we have. Okay, and to add to that, we have a substantial amount of customers who are 2G customers on our network, and that gives us the unique opportunity of really upgrading those customers, you know, as and when we are rolling out the network and we are reaching closer to the customers who would want to upgrade from their 2G to a 4G network, or 5G.

Okay, so if I may ask, I mean, so why the growth in ARPU, what would you think is the biggest driver, the 2G to 4G upgrades, would this be the key driving factor in ARPU, among other things?

Yeah, I mean, it is the, that's the premiumization that happens that, you know, when the customer keeps upgrading himself. So, one upgrade is when a 2G customer is upgrading to a 4G or a 5G handset. Second upgrade that we see is when you have a smartphone, but you are probably a multi-simmer, which means you have two or three operators in, and when you start using my network only for voice, and then you migrate to a data, that's another opportunity for me, And that's, again, a very significant base for us. And then the third opportunity for us is when you are a data customer, but not unlimited or a truly unlimited data customer. And then you migrate to that depending upon how your data usage pattern is. So between the three, we upgrade our customers depending upon, you know, which cohort the customers belong to. And each of these upgrade cohorts has an ARCU differential, which is where the ARCU built.

Our next question comes from the line of Bhavineni Srinivas, an individual investor. Please go ahead.

No chance to go for the equity instead of loans for the improvement of this water phone area.

Thank you for the question, sir. I think if you look at our balance sheet, sir, there is a lot of equity. In fact, all our investments have been funded by equity. Our debt, as we speak, is only 3,489 crores. And I think being an infra company, there is enough room for debt. And I think you started with this comment saying you are worried. I think Abhijit spoke about the efforts we are on the debt race. So I think we are confident on that. And hence, at this time, I think we are more focused on debt versus equity.

Okay, sir. Please minimize the debt and improve the company's balance sheet. Thank you, sir.

Thank you. Our next question comes from the line of Aditya Bansal with Motilal Oswal. Please go ahead.

Yeah, thanks for taking my question. My first question is around the R2 again. So would you be able to provide some color in terms of penetration on unlimited data plants and non-stop hero plants in the mix currently? And where would you see this settling out over the medium term?

So, see, Aditya, thanks for asking that question. As I was explaining, we have a pretty large and significant opportunity as far as both these cohorts are concerned, whether it is unlimited voice moving to unlimited data or unlimited data moving to a non-stop hero. We are upgrading, I would say, Almost to tune off you folks and customers every quarter on an upgrade basis in this. So that's the flavor that I can, at this point in time, that's the whole endeavor on the organic art.

Any sense on the current mix, so that we also know like what is the potential there?

Sorry, can you repeat your question?

Any idea on the current mix of this unlimited data class, so that we also get an idea like what could be the further potential from here on?

As I had indicated earlier as well, we have 66% of our customers who are on smartphone between 4G and 5G, and 34% of the customers are on 2G. And that's the big mix that we see. Between the mix of our customers who are on the smartphone, there is a significant amount of customers who are using data and then we still have an opportunity who have a smartphone but are using us for voice. Probably in those areas, we have not reached on the 4G data. So that's another big cohort of opportunity that we have.

Got it. Thanks a lot. So the second one is on the subscriber trends. So I see there are several divergences this time in terms of trends on B, Vela, where we have a decline. Customer wireless, again, if I net off the MTM, there is a decline. So what explains the same, like in terms of you are saying, like on every circle, you are seeing some bit of improvement. Versus VLR decline. Any comments on that?

The only, there's no, so as I said, Ajita, there's no structural challenge that we see, but quarter one typically is a seasonal quarter where we see some customers migrating back from a urban to a rural market, and those are some of the markets where we feel that, you know, our network probably has still not been there, and that's the only delta that we see at this point in time. There's no structure. So whether it is our gross addition is concerned or the quality of acquisition is concerned or the customer retentivity is concerned, and I'm talking both on postpaid and prepaid, this doesn't seem to be an issue. So this is more a seasonal thing, and it will kind of start coming back. Rather, in the month of July, we've already started to see some good traction. Sure.

And lastly, in terms of the site count, can you just reconfirm, you mentioned three, three and a half per month. And like, what is the medium term target that we are looking for the 4G sites?

If you remember in the three year guidance, I had said roughly around 55, 57,000 sites on 4G and 86,000 to 90,000 sites on 5G. So we are on the trend. We intend to finish our 4G rollout over the next 18-odd months so that, you know, we are at par on what our target is in the 17th circle. The 5G, as I said, because, you know, you need a little bit of a fiber, so that might get into the third year of execution as well. So we maintain and then stand on that guidance.

Thanks a lot. Thanks for answering the questions and all the rest.

Thank you, Aditya.

Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. Kishore for closing comments. Over to you, sir.

Thanks, Arvind. The defining theme for this quarter is momentum. We have delivered on all the seven critical business parameters. Each win, the building block tours are FY29 guidance. Our three-year targets are unambiguous, sustained net addition, double-digit revenue flow, and 3x on the cash EBITDA. We already demonstrated investment continuity across multiple quarters. The continued support from the promoters and our ongoing conversation with various sets of lenders gives us the confidence that we have the financial architecture in place to support our roadmap. Our path forward is clear, and what we are now focused is on execution. Thank you for joining in. We'll meet you again next quarter. Thank you.

Thank you. On behalf of Vodafone Idea, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.