Vodafone Idea Q2 FY26 Analysis: Net Loss Narrows, ARPU Improves, 4G Expansion Continues

Vodafone Idea (Vi) reported its Q2 FY26 results, showing a gradual improvement in key operating metrics even as the company continues to struggle with losses due to heavy debt and spectrum-related liabilities.

Despite these challenges, the quarter highlighted a narrowing net loss, better ARPU(Average Revenue Per User), subscriber stability, and ongoing 4G expansion, supported by tariff hikes and operational efficiencies.

The telecom sector remains competitive, with Bharti Airtel and Reliance Jio dominating. Vodafone Idea’s revival is strongly dependent on timely fundraising, network expansion, and clearing government dues.

Key Highlights – Q2 FY26

 

• Net loss narrowed to Rs. 5,524 crore vs Rs. 7,176 crore in Q1 FY26
  
  

• Revenue rose to Rs. 11,195 crore, up 2% QoQ
  
  

• ARPU improved due to tariff hikes
  
  

• EBITDA margin stable at 42%
  
  

• Subscriber base gradually stabilising
  
  

• 4G additions continue, improving user mix
  
  

• Fundraising remains critical, with fresh equity/convertible routes expected
  
  

Let’s break down the financial performance and business highlights for the quarter.

 

About the Company

 

Vodafone Idea Limited (Vi) is one of India’s largest telecom service providers, created through the historic merger of Vodafone India and Idea Cellular in 2018. Headquartered in Mumbai, Vi operates across all 22 Indian telecom circles and provides a wide range of services including mobile voice, broadband, enterprise solutions, digital content, IoT(Internet of Things), and cloud-based offerings. With a massive pan-India presence, a large spectrum portfolio, and one of the country’s biggest optical fiber networks, Vodafone Idea serves millions of customers every day while progressing toward building a robust 5G-ready ecosystem.

The company’s strength comes from the combined legacy of two powerful conglomerates:
Vodafone Group Plc (UK) — a global telecommunications giant, and
Aditya Birla Group (ABG) — one of India’s most respected diversified business houses.

Together, they bring decades of global expertise, deep Indian market understanding, and an unmatched telecom heritage into the formation of Vodafone Idea.

 

Vodafone Group

 

Vodafone Group Plc, founded in 1982, is one of the world’s largest telecom operators with presence across Europe, Africa, and Asia. Known for its pioneering role in mobile communications, Vodafone has been at the forefront of significant technological advancements including 3G, 4G, IoT connectivity, and large enterprise mobility solutions.

Vodafone entered India in 2007 by acquiring Hutchison Essar, rebranding it as Vodafone India, and quickly becoming a premium telecom brand known for:

 

• Strong metro market presence
  
  

• High-quality voice and data experience
  
  

• Enterprise solutions for corporates
  
  

• Customer-first services including M-Pesa wallets and digital care
  
  

Vodafone India built a solid reputation for superior network quality and global best practices in telecom engineering.

 

Aditya Birla Group

 

The Aditya Birla Group, led by Kumar Mangalam Birla, is a 150+ year old global conglomerate with operations in metals, cement, textiles, chemicals, retail, financial services, renewables, and telecom. Its telecom journey began with Idea Cellular, which grew from a regional operator into a pan-India brand.

Idea’s growth story included:

 

• Major acquisitions (like Spice Communications)
  
  

• Rapid rural and semi-urban penetration
  
  

• Affordable voice and data services
  
  

• Deep distribution networks
  
  

• Customer-centric service innovations
  
  

By 2017, Idea had become one of India’s top three telecom operators.

 

The Birth of Vodafone Idea Limited (VIL)

 

In 2018, Vodafone India and Idea Cellular merged to form Vodafone Idea Limited, creating what was then India’s largest telecom operator with over 400 million subscribers. The merger aimed to:

 

• Consolidate infrastructure
  
  

• Strengthen financial stability
  
  

• Realize cost synergies
  
  

• Expand 4G coverage
  
  

• Improve customer experience
  
  

This merger marked one of the largest telecom consolidations in Indian history.

 

Ownership Structure and Government Stake

 

Post-AGR(Adjusted Gross Revenue) dues, government reforms, and equity conversions, VIL’s current ownership includes:

 

• Vodafone Group Plc
  
  

• Aditya Birla Group
  
  

• Government of India, which holds a major stake after converting deferred interest liabilities into equity
  
  

This unique structure highlights Vi’s critical importance in India’s telecommunications landscape.

 

Subsidiaries & Associated Entities of Vodafone Idea

 

Vodafone Idea operates through several subsidiaries and strategic arms that strengthen its mobility, broadband, enterprise, technology, fiber, and digital service capabilities.

 

Key subsidiaries and associated companies include:

 

Core & Technology Subsidiaries

 

• Vodafone Idea Shared Services Ltd (VISSL) – central IT, billing & operational backbone
  
  

• Vodafone Idea Technology Solutions Ltd – technology development, network innovation
  
  

• Vodafone Idea Digital Ltd – digital apps, content, payments, ads, OTT partnerships
  
  

Enterprise & Network Subsidiaries

 

• Vodafone Idea Business Services Ltd – enterprise mobility, IoT, and cloud connectivity
  
  

• Vodafone Idea Infrastructure Management Services Ltd – tower, network, and infra operations
  
  

• Vodafone Idea International Pte Ltd (Singapore) – international bandwidth, carrier services, procurement
  
  

Joint Ventures / Associated Entities

 

• Firefly Networks Ltd (JV with ATC) – pan-India public Wi-Fi network operations
  
  

• Indus Towers Ltd (via Vodafone’s legacy holding) – one of India’s largest tower infrastructure companies
  
  

These subsidiaries collectively create a strong operational and digital ecosystem enabling Vi to compete in both the consumer and enterprise segments.

 

Brand Evolution: From Vodafone + Idea to “Vi”

 

In 2020, the company unified Vodafone and Idea under a single identity known as “Vi” — symbolizing “We” and representing unity, togetherness, and collaborative strength. The new brand reflects Vi’s focus on a youthful, digital-first India with offerings across payments, entertainment, UPI, broadband, and business services.

 

Key Company Facts

 

Vodafone Idea – Major Moves in 2025

 

• November 2025: Vodafone Idea reported a narrowing net loss of Rs. 5,524 crore for Q2, a significant reduction from prior quarters, signaling early signs of financial stabilization.
  
  

• October 2025: The company intensified its 4G expansion efforts, citing that over 84% of India’s population is now covered by its 4G network, according to its leadership.
  
  

• September 2025: Vi accelerated engagement with lenders to raise Rs. 50,000–55,000 crore to fund its capital expenditure roadmap, including 4G densification and fiber build-out.
  
  

• August 2025: Strengthened its brand identity by pushing deeper into its digital ecosystem, notably expanding the Vi App with more features, content, and customer engagement tools.
  
  

• July 2025: Advanced its enterprise business, expanding IoT and cloud solutions under Vi Business, targeting smart city, industry automation, and corporate digital transformation.
  
  

• June 2025: Vi’s network optimization efforts continued, with more aggressive deployment of small cells and massive-MIMO sites to improve data speeds and customer experience in urban and semi-urban markets.
  
  

Evolution of Vodafone Idea – Year-Wise Journey

 

Major Achievements

 

• Formed India’s largest telecom operator (post–2018 Vodafone–Idea merger), with the widest subscriber base at the time of integration
  
  

• Pan-India presence across all 22 telecom circles, serving millions of prepaid, postpaid, and enterprise customers
  
  

• Built India’s largest single integrated mobile network during its post-merger consolidation phase
  
  

• Successfully launched and expanded GIGAnet 4G, recognized for strong voice quality and improved download speeds in multiple circles
  
  

• One of India’s top enterprise mobility and IoT solution providers, serving large corporates and government clients
  
  

• Significant spectrum portfolio across low-band (900 MHz), mid-band (1800/2100 MHz), and high-band (2500 MHz) frequencies
  
  

• Achieved strong improvement in ARPU over recent financial years despite intense industry competition
  
  

• Government of India became a major shareholder after converting dues to equity—a rare and major milestone for an Indian telecom operator
  
  

• Large-scale network modernization, fiber expansion, and massive MIMO deployments across key urban markets
  
  

• Continues to serve 200 million+ subscribers (latest ranges), keeping Vi among India’s top three telecom operators

 

Corporate Actions Journey 

Quarterly Financial Performance 

Vodafone Idea showed slight revenue growth and stronger operating performance in Sep 2025, but the biggest improvement came from a sharp drop in interest costs. As a result, the company’s net loss narrowed significantly compared to Sep 2024.

 

Annual Financials 

Vodafone Idea’s FY26 TTM performance shows marginal revenue growth, stronger operating margins, and reduced interest costs, helping narrow losses compared to FY25. Signs of slow financial improvement continue.

 

Balance Sheet Summary

Vodafone Idea’s FY25 balance sheet shows improved equity due to fresh fund infusion and a reduction in accumulated losses. Borrowings and other liabilities decreased, indicating lower debt pressure. Assets increased mainly on the back of higher working capital (other assets), while fixed assets and CWIP remained stable, reflecting steady capex activity.

 

Cash Flow Summary

Vodafone Idea’s FY25 cash flow shows weaker operating cash generation but higher financing inflows and increased investments, resulting in a small positive net cash position compared to a slight outflow in FY24.

 

Shareholding Pattern

Between Sep 2024 and Sep 2025, Vodafone Idea’s shareholding shifted significantly toward the Government, whose stake more than doubled to 49%. Promoter and FII holdings declined sharply, indicating reduced private and foreign investor confidence, while public shareholding also dropped as ownership consolidated under the Government.

 

Peer Comparison (Latest Quarter)

Vodafone Idea clearly lags behind peers with negative profits and negative ROCE, while competitors like Bharti Airtel, Bharti Hexacom, and Tata Communications show strong profitability and superior returns. Despite a large customer base, Vi remains the weakest performer financially in the sector.

 

Business Outlook

 

Vodafone Idea’s revival depends on:

 

• Fresh equity infusion
  
  

• Government relief support
  
  

• 4G and upcoming 5G rollout
  
  

• Tariff hikes in prepaid & postpaid
  
  

• Improvement in ARPU
  
  

• Debt restructuring
  
  

With the government becoming a major shareholder and continuous tariff hikes across the industry, Vi could gradually stabilise. However, network quality gaps compared to Jio & Airtel remain a major challenge.

 

Strengths

 

• Improvement in ARPU
  
  

• 4G subscriber additions continue
  
  

• EBITDA margin stable at 42%
  
  

• Narrowing net loss
  
  

• Government shareholding provides survival comfort
  
  

Risks

 

• Extremely high debt levels
  
  

• Heavy spectrum dues
  
  

• Lower capex compared to competitors
  
  

• Loss of high-value customers
  
  

• Fundraising delays may hurt operations
  
  

Investor View

 

Vodafone Idea remains a high-risk turnaround story.

Investors with low risk appetite should avoid.
Investors with high risk appetite and long horizon may consider tracking but not rushing into the stock until:

 

• Fundraising is completed
  
  

• 4G coverage significantly improves
  
  

• ARPU rises consistently
  
  

• Debt restructuring becomes clear
  
  

Conclusion

 

Vodafone Idea has shown early signs of stability with improved ARPU, stable EBITDA margins, and a narrowing loss.

However, the telecom operator is still far from financial comfort due to massive debt and capital requirements.

A successful revival will depend heavily on fundraising, network investments, and further tariff hikes.

 

FAQs

1. Why is Vodafone Idea still making losses?

Vodafone Idea remains loss-making mainly due to high interest costs, large spectrum dues, and lower 4G capex, which affects subscriber growth and overall profitability.

 

2. Is Vodafone Idea a good long-term investment?

VI is a high-risk investment. Long-term visibility is unclear because the company depends heavily on fundraising, network upgrades, and debt reduction.

 

3. What is the biggest trigger to watch for Vodafone Idea?

The key trigger is successful fundraising and faster 4G/5G expansion, which can improve subscriber additions, ARPU, and financial stability.

 

4. Will Vodafone Idea’s ARPU improve further?

Yes. Industry tariff hikes and gradual network upgrades are expected to push ARPU higher in the coming quarters.

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