Vodafone Idea subscribers porting out to BSNL after tariff hike: CEO

The port out of Vodafone Idea (Vi) subscribers to state-owned BSNL has increased since the tariff hikes in July, CEO Akshaya Moondra said on Tuesday.

Vi had jacked up tariffs in July following a similar move by competitors Airtel and Jio. But BSNL had maintained the status quo.

“The port out to BSNL has increased from the tariff-increase levels, which is a space that we are watching. The reason for that is they have not increased their tariffs, so there's a fair amount of arbitrage,” Moondra told analysts at the post quarterly results call. Moondra, meanwhile, stressed the incidence of sim consolidation will remain low going forward.

Vi’s churn rate remains high with the company continuing to lose customers to larger rivals, and ending Q1 with 2.5 million fewer subscribers.

He added, “Trends of downtrading, or there being a slightly longer time being taken for recharges, and downgrading where people spend the same amount on lower benefits, are largely in line with previous tariff increases. Whether there is an element of sim consolidation is difficult to say.”

However, Moondra asserted that minimal increase in entry-level plans will reduce the chances for sim consolidation. The April-June quarter (Q1) of FY25 was the twelfth successive quarter of 4G subscriber additions for Vi, figures released on Monday showed.

The 4G subscriber base marginally increased by 0.3 per cent annually to 126.7 million.

Analysts say Vi’s churn rate as of Q1 stands at 4-4.5 per cent, higher than the 2 per cent churn seen by rivals. Moondra said the turnaround in churn may not come immediately.

The CEO also said in any financial year, Q4 and Q1 are usually “seasonally weak” quarters registering slower subscriber growth.

“Things start turning around from Q3 onwards,” he said. The benefit of the tariff hikes will be seen in the coming quarters, the CEO stressed.

Capacity and coverage boost

Vi has kick-started the investment cycle and are deploying the funds from the fundraise into 4G coverage and capacity.

“We expect a 15 per cent increase in our data capacity and an increase in 4G population coverage by 16 million by September-end,” Moondra said.

While capacity has not been a limitation for the company apart from few pockets in the Gujarat and Uttar Pradesh West telecom circles, 4G coverage area remains a major focus.

Vi is in talks with vendors to order equipment and start deliveries by the next quarter, he added.

Some orders for software and hardware upgrades have already been placed, he said. The company currently has 168,000 unique 4G sites, which is slated to rise to 215,000 sites.

Vi currently has a Rs 50,000-55,000 crore capex guidance and capex towards augmenting 4G will be front ended with most of the spends set to take place over the next 12-15 months, Moondra said.

Meanwhile, while the telco’s capex kitty has funds earmarked for 5G, investments will be “calibrated and based on how the market evolves,” Moondra said.

However, a fairly large percentage of Vi subscribers already have 5G-enabled smartphones, he revealed.

Vi on Monday reported a net loss of Rs 6,432 crores in the first quarter (April-June) of FY25 (2024-25), down nearly 18 per cent from the Rs 7,840 crore loss seen in the corresponding quarter of FY24, as a result of lower interest and financing costs. On a sequential basis, the firm’s net loss shrank 16.1 per cent, down from Rs 7,675 crore in the preceding quarter.