EUR 120.00 For Business Accounts Only

MOSL: VODAFONE IDEA (Neutral): Liquidity a major concern; fund raise awaited

Vodafone Idea: Liquidity a major concern; fund raise awaited

(IDEA IN, Mkt Cap USD3.4b, CMP INR9, TP INR9, 2% Upside, Neutral)

 

• VIL posted an adjusted EBITDA of INR17.1b (excluding an INR4.5b one-off on a pre Ind AS 116 basis), down 5% QoQ (16% miss) on continuing subscriber churn and weak ARPU.
• Upcoming debt repayments of INR60b in FY22 and INR82b deferred spectrum payments require an immediate liquidity support. EBITDA (pre Ind AS 116) of INR88b in FY22E makes it challenging to service its net debt of INR1,190b (excluding AGR and lease liability) and invest in its network. We maintain our Neutral
•  Adjusted EBITDA fell 5% QoQ to INR17.1b; subscriber loss slows down
• Revenue fell 11.8% QoQ to INR96.1b (in line), led by an 11.6% decline in ARPU to INR107. Subscriber base declined marginally (0.7%) QoQ. The management attributed the steep decline to: a) 9.6% impact on abolishment of IUC, effective 1^st Jan’21, and b) 2.2% impact due to lower number of days in 4QFY21. Adjusted for the same, revenue was flat QoQ.
• Reported EBITDA grew 2.9% to INR44.1b (4.2% beat) as SG&A fell 32% QoQ. Excluding a one-off expense of INR4.5b related to network and IT cost, adjusted EBITDA stood at INR17.1b. This is 5% lower QoQ, factoring the INR3b one-off in 3QFY21.
• Net loss stood at INR70b v/s INR45b in 3QFY21. Adjusted net loss (for exceptional items) stood at INR60.5b (in line) on a post Ind AS 116 basis v/s a loss of INR62.3b in 3QFY21.
• VIL lost 2m subscribers in 4QFY21 (-0.7% QoQ), taking its total count to 269.8m. This is similar to 3QFY21 as against an 8m/11m decline in 2Q/1Q. Active subscribers continued to decline, though at a much lower pace (0.9m) to 255.7. This is much lower than the cumulative loss of 37m in 9MFY21. Gross additions improved further to 6m, after turning positive (4.2m) in 3QFY21, though the churn has increased to 3% v/s 2.3% QoQ.
• 4G subscribers rose by 4.2m v/s 3.6m in 3QFY21, taking its total count to 9m. This is better, but far off from Bharti/RJio’s additions of 13.7m/15.4m. The increase was mainly from a shift in 3G subscribers as overall data/broadband subscribers were flat. Broadband subscribers increased by 2.8m v/s 1m in 3QFY21.
• ARPU fell by 11.6% QoQ to INR107 due to an IUC impact. Adjusted for the same, ARPU was broadly flat. Bharti’s ARPU fell 1% QoQ to INR145.