Amid reports suggesting that the government may be considering selling its stake in Vodafone Idea, the telecom company clarified on Tuesday that any decision regarding the government’s holding is entirely up to the Centre. Vodafone Idea stated that it has had no communication from the government on this matter.
During Vodafone Idea’s Q1 earnings call, CEO Akshaya Moondra mentioned an increase in user port-outs to BSNL since recent tariff hikes, but he believes these decisions may not sustain in the long term due to the superior 4G coverage offered by Vodafone Idea (VIL).
Addressing media reports about the government exploring options with sovereign wealth funds for offloading its stake, Moondra stated, “We have had no communication with the government… To that extent, we have to say that the government as a public shareholder… they are free to take decisions with respect to their investment. That is an independent subject.”
Moondra further emphasized that whether the government continues with its shareholding or decides to divest gradually is independent of their policy stance on the conversion of dues to equity. He reiterated that the government’s policy remains focused on supporting three healthy private operators and that converting debt to equity was meant to bolster the company’s balance sheet.
Regarding the impact of recent tariff hikes, Moondra noted that it is still early to draw conclusions about SIM consolidation. He pointed out that the minimal increase in entry prices this time could result in relatively less SIM consolidation.
“One of the trends we have seen is that the port-out to BSNL has generally risen from pre-tariff increase levels, which is a space we are watching… and the reason for that is because they (BSNL) have not increased their tariffs, so there is a fair amount of arbitrage,” Moondra said.
He expressed confidence that decisions to port out purely based on tariffs might not be sustainable. “We are watching this space—our expectation is that customers who are used to having good coverage and the experience of 4G coverage, probably the current offering of BSNL may not be to that extent… As people who may have taken a quick decision in terms of tariff actions… may most likely come back. But we will keep on watching this space and see what needs to be done,” he said.
Vodafone Idea reported a narrowing of losses for the recently ended June quarter to Rs 6,432.1 crore, primarily due to the addition of 4G subscribers. The telecom firm is currently expanding its 4G coverage and capacity and plans to launch 5G services following recent fundraising efforts. VIL’s losses were Rs 7,840 crore in Q1 FY24 and Rs 7,674.6 crore in Q4 FY24.
The company’s revenue dipped 1.3 percent year-on-year to Rs 10,508.3 crore for the fiscal’s first quarter ended June 2024. The ARPU (average revenue per user) for the quarter stood at Rs 146.
This year, Vodafone Idea raised equity funding of about Rs 24,000 crore, including Rs 18,000 crore via an FPO in April, Rs 2,080 crore via preferential issuance to ABG (promoter) entity in May, about Rs 2,460 crore via preferential issuance to Nokia and Ericsson in July, and Rs 1,600 crore via conversion of OCDs between March 2024 to July 2024.
Following these issuances, the promoters’ shareholding stands at 37.2 percent, and the government’s shareholding is at 23.1 percent.
