Vodafone Idea Q2 FY27 Earnings Call: Capex Orders Cross Rs. 13,200 Cr, PSU Bank Consortium Nears Closure

Steady Top Line, Improving Cash EBITDA Quality

• Revenue of Rs.11,884 crore — up 6.2% YoY and 1.7% QoQ in Q2 FY 2026-2027; H1 FY 2026-2027 EBITDA was Rs.10,015 crore, up 7.7% YoY.
• Cash EBITDA of Rs.2,498 crore — up 11.2% YoY with margin improving over 95 bps to 21%, despite rolling out over 22,500 unique broadband sites in the last 12 months and higher network costs.
• EBITDA of Rs.4,981 crore — up 6.3% YoY with margin stable YoY at 41.9%; sequentially subdued by personnel cost phasing and higher marketing spend on brand refresh, which the CFO expects to persist for the remainder of FY 2026-2027.
• Loss adjusted for exceptional items of Rs.5,513 crore — versus Rs.5,562 crore in Q2 FY 2025-2026; an adverse exceptional item of Rs.462 crore arose from mark-to-market of treasury assets, which the CFO said will be remeasured every quarter until the shares are liquidated.
• Depreciation of Rs.5,505 crore and net finance costs of Rs.4,975 crore — excluding Ind AS 116, these were Rs.3,894 crore and Rs.3,684 crore respectively.

Base Grows on M2M and Postpaid; ARPU Momentum Muted by Seasonality

• Customer base of 194.4 million — up 1.3 million QoQ from 193.1 million, driven mainly by machine-to-machine and postpaid; prepaid net churn fell to 0.6 million from 1.5 million in Q1 FY 2026-2027.
• Postpaid base (incl. M2M) of 33.9 million — the highest sequential postpaid growth since FY24; human postpaid net adds rose significantly QoQ, attributed to the postpaid proposition including international roaming and Red X family plans.
• ARPU of Rs.198, up 9.7% YoY — the CEO described growth as healthy but muted versus expectations due to Q2 seasonality, and expects the trend to return to previous-quarter levels from Q3 FY 2026-2027.
• ~10% ARPU growth momentum expected organically — management expects to maintain it over the next few quarters (period unspecified), driven by upgrades to non-stop hero plans and premiumisation of unlimited-voice smartphone customers.
• 11 of 17 critical circles showed positive net adds — per the latest TRAI report, a figure the CEO said holds even excluding M2M; he declined to share circle-wise data.
• Prepaid net adds marginally negative in Q2 FY 2026-2027 — the CEO expects prepaid to turn positive on a standalone basis "very soon," citing a more than 1 million swing in non-M2M human SIMs from Q1 to Q2 FY 2026-2027.
• Churn rose 0.2% QoQ but improved 0.5% YoY — the CEO said churn is lower in areas where network rollout is complete and that retention is now a more critical lever than acquisition.

Accelerated Rollout Enters Next Phase of Execution

• Nearly 9,000 broadband towers added in Q2 FY 2026-2027 — the highest quarterly addition since the investment program began after FY24, taking unique broadband tower count to close to 2,14,000; 4G population coverage reached 88% and 5G services are available in 400 cities and towns.
• Capex of Rs.3,946 crore in Q2 FY 2026-2027 — more than twice the Q1 FY 2026-2027 run rate, taking H1 FY 2026-2027 capex to nearly Rs.6,000 crore; capex orders worth over Rs.13,200 crore placed against the three-year capex guidance of Rs.45,000 crore.
• 4G rollout on track to conclude by FY28 — to achieve coverage parity with peers in its 17 key circles, with a reaffirmed pace of 3,000 to 3,500 unique 4G towers per month.
• Capex intensity has roughly doubled — the CEO said it will continue at this intensity over the coming quarters; he acknowledged the rollout will increase OpEx and weigh on EBITDA, with inflation offset so far by cost-saving measures.
• 4G/5G subscribers of 131 million — versus 127.8 million in Q2 FY 2025-2026; data usage rose 27.1% YoY to 93.6 petabyte per day from 73.6 petabyte per day.

Incremental Funding Secured; PSU Consortium Taking Longer

• Total secured funding of over Rs.10,500 crore through H1 FY 2026-2027 — including warrants, fund-based and non-fund-based facilities; over Rs.4,000 crore of incremental bank funding was arranged in Q2 FY 2026-2027.
• Total funding of Rs.35,000 crore — comprising Rs.25,000 crore funded and Rs.10,000 crore non-funded facilities; the CEO said the company will not need the full amount at once and will draw down as required.
• SBI-led public sector bank consortium progressing well — but the CEO said multi-lender involvement means the process is taking longer than earlier anticipated; he described the PSU cohort, the largest, as "very close to the closure."
• Bank debt of Rs.943 crore and cash of Rs.5,470 crore as of September 30, 2026 — the CFO said legacy bank debt has been fully repaid as of the call date and current drawdowns represent incremental funding.
• Spectrum dues of over Rs.4,300 crore paid — due in October 2026; total spectrum payments now exceed Rs.6,000 crore against approximately Rs.7,000 crore of spectrum obligations due in FY 2026-2027.
• Rs.800+ crore drawn from the new non-funded LC facility — the CFO said non-funded letters of credit are being utilised first, with more funded drawdowns expected in Q3 FY 2026-2027.

Rs.185 Voice Plan Disruption Minimal; 8 Circles Await Spectrum Renewal Clarity

• Industry launched voice and SMS-only plans at Rs.185 for 28 days — about 7% below the entry-level bundled plan Vodafone Idea previously offered, per IIFL's Balaji Subramanian, who flagged downtrading risk given the company's relatively high 2G subscriber base.
• Minimal initial disruption from the Rs.185 plan — the CEO said the change was made in line with the TRAI mandate, that there has been no significant downgrade over at least the last 2 weeks, with slight upside from customers migrating to the Rs.199 plan; a fuller ARPU assessment is expected in Q3 FY 2026-2027 with about a month or two of data.
• 8 circles have spectrum due for renewal in December 2026 (FY 2026-2027) — including Bihar; the company has represented its interest in continuing with that spectrum to the Department of Telecommunications, as auctions are not yet scheduled.
• Services not expected to be disrupted on spectrum renewal — the CEO said the company will wait and watch on the renewal process.
• Keen to participate in any structural industry tariff increase — but the CEO said the company does not rely on a transactional one.

B2B Shift to Intelligent Connectivity; Sustained Investment Intensity Ahead

• B2B revenue run rate of Rs.15 billion per quarter in Q2 FY 2026-2027 — cited by Ambit's Vivekanand Subbaraman, who asked about headroom to monetise B2B.
• Enterprise strategy shifting from traditional connectivity to intelligent connectivity and digital solutions — focused on core enterprise connectivity, IoT, digital infrastructure and managed services (security and cloud); includes a partnership with AWS, the Hindalco private network deployment in Odisha, and a shift toward a build-and-sell connectivity approach.
• "Not a very significant player" in non-mobility connectivity — per the CEO, though "a significant player" in IoT in certain segments; fixed-line holds a large share of the money in the market and the company needs to participate "a little more aggressively," with its approach changed from "sell and bill" to "bill and sell."
• Unannounced enterprise initiatives may be shared in Q3 FY 2026-2027 — the CEO said connectivity capacity has been augmented "to a large extent" but it is "a long journey" to get it fully right.
• Q2 FY 2026-2027 framed as "another quarter of progress" — the CEO cited improving subscriber trajectory, ARPU and revenue growth, and cash EBITDA quality; priorities ahead are sustaining network investment, building on the subscriber trend, and translating the differentiated proposition into customer engagement, with intent to sustain investment intensity in the coming quarters.