Vodafone Idea Ltd has said it aims to improve its cash EBITDA margin to more than 35% over the next three to four years, driven by revenue growth, tariff hikes, lower churn and operating leverage from ongoing network investments.
Speaking during the post-earnings conference call, the telecom operator said its current cash earnings before interest, tax, depreciation and amortisation (EBITDA) margin stands at around 20% and is expected to improve meaningfully as network expansion and customer quality initiatives begin yielding results.
The comments came after Vodafone Idea reported a net profit of ₹51,970 crore for Q4FY26, driven by a one-time exceptional gain arising from AGR re-assessment and recognition of the present value of future AGR payments.
Revenue for the quarter stood at ₹11,332 crore, while EBITDA rose to ₹4,889 crore and EBITDA margin improved to 43.1%. ARPU increased to ₹190, which the company said was the highest in the industry.
The management identified four key drivers for margin expansion — revenue growth, better pricing, lower churn and operating leverage from the planned ₹45,000-crore capex programme.
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The company reiterated that its ₹45,000-crore capital expenditure plan over the next three years remains intact and said investment intensity will rise sharply from the June quarter onwards.
Vodafone Idea also said it is in advanced discussions for a ₹25,000-crore funded facility and a ₹1,000-crore non-funded facility led by an SBI consortium involving PSU, private and foreign banks. The management said it remains confident of closing the debt raise soon.
According to the company, network investments over the last six quarters are already translating into better customer acquisition, improved retention and stronger customer quality in circles such as Maharashtra, Gujarat and Kerala.
It added that churn has reduced, although it remains elevated compared to peers, with retention improving significantly in circles where network spending has been higher.
The telecom operator also said gross subscriber additions were deliberately moderated to improve customer quality and reduce acquisition costs. Customer additions declined from 21.8 million in Q2 to 19.3 million in Q3 and 19.1 million in Q4 as the company shifted focus from quantity to quality.
The management highlighted mobile number portability (MNP) as a major opportunity, noting that nearly 47% of industry additions currently come from operator switching. Vodafone Idea said it remains underrepresented in this segment and is targeting gains in markets with stronger network coverage and service quality.
The company said around 33% of its subscriber base still uses 2G feature phones, offering a sizeable upgrade opportunity. Feature phone-to-smartphone upgrades continue at 3-4% within the network with no visible slowdown so far, it added.
Vodafone Idea further said differentiated offerings such as ‘Non-stop Hero’ are helping improve customer mix and monetisation. The offering recorded nearly 25% quarter-on-quarter growth, aided by site additions, capacity expansion and wider population coverage.
Network operating costs remained largely flat despite continued expansion, with expenses easing marginally to ₹2,345 crore in Q4 from ₹2,361 crore in the previous quarter, despite 6% year-on-year site growth and the addition of 7,000 BTS sites.
The company attributed the efficiency gains to lower diesel dependence, network electrification and self-optimised networks, while cautioning that some inflationary pressures may emerge going forward.
“The worst appears to be behind,” with all key operating metrics moving in the right direction, the management said.
Shares of Vodafone Idea closed nearly flat at ₹12.98 on Monday; they have surged 93.15% over the last 12 months.
