Stabilisation in Revenue and Increased ARPU The telecom operator firstly noted that it was on the path of achieving stabilisation of revenue in the Q4 and it came majorly as a result of ‘service validity vouchers’. The earnings report highlighted that Revenues grew by +0.1% QoQ in Q4 (Q3: -2.2%, Q2: -7.1%). Q4 average daily revenue increased by 2.3% QoQ after 11 consecutive quarters of decline. Vodafone Idea also noted that its strategic initiatives to better the ARPU (Average Revenue Per User) also have started to come to fruition as the average daily revenue (ADR) for the quarter grew 2.3% QoQ after witnessing successive declines for the 11 prior quarters. Also, the revenue for the quarter was Rs 117.8 billion, up 0.1% QoQ, lower than the ADR growth due to fewer days in Q4FY19. Rapid Synergy Realisation Another highlight from the earnings report was on synergy, which noted that the synergy realisation was well on track with ~60% of the synergy target achieved to date. The telcos’ normalised Q4 operating expenses excluding licence fee & spectrum usage charges and roaming & access charges were ~Rs 12.8 billion (~Rs 51 billion annualised) lower than the telco’s proforma operating expenses in Q1, i.e. the last quarter before completion of the merger. Earnings and Debt The company also showed improvement in earnings as the EBITDA increased by 57% QoQ to Rs 17.9billion. EBITDA normalised for one-offs stands at Rs 15.9billion. The telecom operator also noted in its report that the network integration is moving at a fast pace and customers now benefit from a unified network experience in the ten service areas of West Bengal, Andhra Pradesh, Haryana, Madhya Pradesh, Himachal Pradesh, Assam, North East, J&K, Bihar and Punjab. As for the debt, the telco announced that the Gross debt as of March 31, 2019, was Rs 1,259.4 billion, including deferred spectrum payment obligations due to the Government of Rs 906.8 billion. Cash & cash equivalents were Rs 75.5 billion resulting in net debt of Rs 1,183.9 billion (vs Rs 1,149 billion in Q3FY19). With the release of the Q4 earnings report, Balesh Sharma, CEO of Vodafone Idea also remarked, “We are pleased with the rapid progress we have made to deliver on our stated strategy. The initiatives we have taken since the merger are yielding positive results, and we are well on track to deliver our synergy targets two years early. India’s Biggest Rights Issue Lastly, Vodafone Idea also highlighted that it successfully closed India’s largest rights issue, raising Rs 250 billion of equity. The telco saw active participation from public shareholders (ex-promoters) which resulted in 1.2x subscription for the public component of the issue, demonstrating investors’ strong support for our strategy. Operational Development On the operational front, the telco added 8,915 4G TDD sites during the quarter to augment capacity and deployed massive MIMO on around 2,000 sites in select key locations. However, unique broadband locations and broadband sites declined this quarter as the process of redeployment is currently underway.
