Vodafone's quarter makes investors sick 😷

Filter Coffee ☕

Jul 2, 2021

1 min read

The gap between India’s top 2 telcos and the third contender keeps widening — as VI limps along, saddled by its mammoth debt, sub-par spectrum assets, and operating inefficiency. Latest quarterly earnings offer a grim picture.

Quick look:

  • Losses of ₹7K crores, a ridiculous 84% higher than what the markets were expecting
  • Revenues of ₹9.6K crores, a 12% sequential drop — forgivable in the COVID situation
  • ARPU declined to ₹107 from ₹121 last quarter, 15-20% below competition
  • Total debt expanded by 60% to ₹1.8 Lakh crore

you can’t possibly compete with that bag on your shoulders, against a much polished balance sheet, and agility of competitors like RIL?

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Dalal Street sniffed the junk and beat VI stock into a pulp — down 8.5% by day's end. With unpaid spectrum charges piling up, falling subscribers, declining revenues, and debt costs — management hinted at a desperate need to raise cash to avoid a crash and burn.

What do they say — a couple days ago Sunil Mittal of Airtel said “it’d be tragic”  if only two players eventually survive in India’s telco game.

Big picture — leaving a market for just 2 giants to split up between themselves could lead to price increases, service declines, and other anti-trust problems, just as the nation heavily leans on telcos to provide connectivity for our rapid digitization.

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