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Investing.com -- Vodafone (NASDAQ:VOD) Idea (NSE:IDEA) shares inched up 1.3% despite the company reporting weaker-than-expected results for the fourth quarter of fiscal year 2025. The telecom operator faced challenges including continued subscriber loss and an increased interest burden.
The company’s net subscriber base declined by 1.6 million quarter-on-quarter to approximately 198 million. However, the average revenue per user (ARPU) saw a marginal increase of 0.6% quarter-on-quarter to Rs 164 per month, which was modest compared to competitors Bharti Airtel (NSE:BRTI) and Jio, which reported flat and 1% increases respectively.
Vodafone Idea’s financial burdens remain significant with government dues amounting to roughly US$22.5 billion, which includes deferred spectrum liabilities and AGR liability. Notably, US$4.3 billion of spectrum auction dues were recently converted to equity, resulting in the Government of India holding a 49% share in the company. Bank and financial liabilities were comparatively lower at US$0.3 billion, and the company maintained a cash balance of US$1.2 billion.
In response to its financial challenges, Vodafone Idea’s board has approved a fundraising plan of Rs 200 billion (US$2.3 billion) through permissible means, which could include equity or debt, via public or private routes.
The ongoing decline in Vodafone Idea’s subscriber base underscores the persistent fundamental issues the company faces. With the Government of India already being the largest shareholder, the potential for further government equity infusions appears limited.
A Macquarie analyst highlighted the broader context within the Indian telecom industry, stating, "For India Telecoms, we continue to see an industry tariff put that in turn drives constructive earnings, cash flow, and returns trajectory. We prefer Indus Towers over Vodafone Idea. Bharti Airtel and Reliance Industries (NSE:RELI) are both Outperform-rated names."
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