Synopsis: Despite being backed by promoter and government support, Vodafone Idea is under pressure to turn around after continuing losses of subscribers, slow 5G rollout and Network issues. Meanwhile, its competitors continue to gain subscribers from the company.
The shares of India’s third largest telecom operator, Vodafone Idea, are in focus after the Trai report for November shows that Vodafone has lost subscribers, whereas its rivals, Airtel and Jio, continue strengthening as they reported subscribers addition durin this period.
With a market capitalisation of Rs 1,24,378 crore, the shares of Vodafone Idea Ltd made a day low of Rs 11.36 per share, down by 4 percent from its previous day closing price of Rs 11.79 per share. Over the past five years, the stock has corrected by nearly 3 percent, as compared to NIFTY 50’s positive return of 87 percent.
Subscription Data
The new subscriber data available for the month of November shows additional doubt on the turnaround story of Vodafone Idea. During November, Reliance Jio added approximately 1.39 million subscribers and Bharti Airtel added approximately 1.22 million subscribers, while Vodafone Idea lost nearly 1.01 million subscribers, which continues the trend of customer loss for this company.
BSNL’s figures, which show that this company has added approximately 0.42 million subscribers, suggest that it is on the path to recovery gradually, whereas MTNL had a slight decrease in subscribers of about 0.01 million.
Subscriber data indicates that, while its competitors continue to grow their subscriber base, Vodafone Idea remains trapped in a continual struggle to stabilise subscribers and, as a result, has a negative effect on its investors.
Recent Developments and Challenges
A few days ago, Vodafone Idea published its newest agreement with its promoter, Vodafone Group, which will resolve a long-standing liability created by the merger of Vodafone-Idea in 2017.
As a result of this new arrangement, Vodafone Idea should receive Rs 5,836 Crores via a structured CLAM mechanism for all legal, tax, and regulatory claims. Rs 2,307 crore will be received over the upcoming 12 months, and the other remaining Rs 3,529 crore will come from the sale of 328 crore shares of Vodafone Idea held by the promoters. This announcement provides a little headroom for the company as it is in the middle of financial burdens. Despite this new agreement, however, concerns about the turnaround of Vodafone Idea remain unanswered.
On Wednesday (31 January, 2025), the stock dropped over 15 percent due to the continued uncertainty surrounding the Government’s AGR relief package. This briefing has caused a lot of uncertainty for investors because the Government has granted a 5-year deferment in addition to providing a fixed total amount of Rs 87,695 crore; however, there is still a lack of definitive clarity as to whether any interest or late penalty fees will be forgiven. Combined with ongoing operational difficulties, this uncertainty has made investors cautious with regard to investing in Vodafone Idea.
In addition, Vodafone Idea has been dealing with a number of operational issues, including a slower deployment of 5G, which is only accessible in 29 cities, while competitors like Airtel and Jio already provide statewide coverage. As a result, a large number of high-data users have moved to operators with 5G networks that are quicker and more dependable. Additionally, call dropouts, poor indoor signals, and erratic 4G connectivity have all been reported by users, suggesting that VI’s network quality still trails below that of its counterparts.
In the meantime, firms like BSNL have benefited from price-sensitive consumers searching for less expensive options due to recent tariff hikes. Concerns about poor customer service, trouble contacting service executives, and the activation of unwanted services have also been raised by VI’s customers. Despite continuous efforts to stabilise the business, these problems have made it more difficult for Vodafone Idea to keep users.
Financial and other highlights
Vodafone Idea Ltd. has reported an operating revenue of Rs 11,195 crore in Q2 FY26, representing a 2 per cent growth compared to Rs 10,932 crore in Q2 FY25. Additionally, on a quarter-on-quarter basis, it grew by 1.6 percent from Rs 11,022 crore.
Regarding its profitability, it reported a net loss of Rs 5,524 crore in Q2 FY26. But the conditions are improving, which widened compared to a loss of Rs 7,176 crore in Q2 FY25. Additionally, on a quarter-on-quarter basis, it widened from a loss of Rs 6,608 crore.
In simple terms, Vodafone Idea’s future is still uncertain about how much of an improvement it can make. Even though there has been some financial support from both Promoters and the Government to give them “breathing room” as they try to recover, they have lost continued access to data concerning their existing subscriber losses and their slow rollout of retail 5G, along with other issues with their networks and customer service.
Meanwhile, other competitors are gaining subscribers while Vodafone Idea doesn’t appear to have stabilised its subscriber base or improved its quality of service. Thus, the future of the company remains uncertain until it can stabilise these elements.
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