Good afternoon, ladies and gentlemen. This is Neerav, the moderator, and welcome you all to the Vodafone Idea Limited conference call. For the duration of this presentation, all participant lines will be in listen-only mode. After the presentation, a question and answer session will be conducted. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. We have with us today Mr. Akshaya Moondra , CEO of Vodafone Idea Limited, and Mr. Murthy G.V.A.S , CFO of Vodafone Idea Limited, along with other key members of senior management on this call. I want to thank the management team on behalf of all the participants for taking valuable time to be with us.
Given that, the senior management is on this conference call, participants are requested to focus on key strategic and important questions to make sure that we make good use of the senior management's time. I must remind you that the discussion on today's call may contain certain forward-looking statements and must be viewed therefore in conjunction with others that the company faces. With this, I now hand the conference call over to Mr. Akshaya Moondra. Thank you, and over to you, sir.
Thank you, Neerav. A warm welcome to all participants to this earnings call. Yesterday, our Board of Directors accepted the positive results for the quarter and year ending March 31, 2023. All the results related documents are available on the website and I hope you had a chance to go through the same. Let me provide a brief on our strategic initiatives and key highlights for this quarter. First, I will hand over to Murthy to share details of the company's financial performance. First of all, during this quarter, we have completed the issuance of equity shares to the government towards loan of INR 161.50 billion crores, presenting the NPV of interest related to the AGR and section B. We have also completed the process of issuing OCDs worth INR 16 billion crores to ATC India in February 2023. Moving on to our strategic initiatives.
Firstly, it is about our focused investment approach. We continue to follow a focused approach to investments biased towards our 17 priority groups, which contribute over 98% of the revenue and around 93% of cash flow. This results in utilizing our capital effectively by ensuring that we continue to offer superior customer experience in these areas, as our network investments have been impacted on account of the capacity constraints. To improve our 4G presence and 4G experience for our customers, we continue to reform our 3G system to 4G and have closed around 1,850 3G sites during the quarter, while we added about 1,950 4G sites as a result of our broadband coverage as well as capacity has expanded.
Our relentless pursuit to offer 4G experience, better 4G experience for customers is clearly visible through these network investment initiatives. We also have the highest rated voice quality in the country as per TRAI MyCall data, 25 months out of 29 months between November 2020 and March 2023. Moving on to market initiatives. Our brand Vi continues to garner good reception, building brand equity across all customer segments in the country. The company continues to make extensive progress on the marketing front by communicating key differentiators to consumers, entering into alliances, and introducing various innovative enhancement services. A refreshed postpaid offering with more benefits, more data, more entertainment, and more privileges, that is Vi Max Postpaid, itself a differentiated offering from the competition was promoted extensively through TV, digital, and retail channels.
In the cricket-obsessed country, our company engaged with the users through Vi 20 template on social media and stayed one of the busiest brands during the first Women's Premier League 2023. Our team has come to engage with users and to promote our music offering on social media during Valentine's Day. Our relentless pursuit on the marketing front is clearly visible by top ranking at the ET BrandEquity India DigiPlus Awards, where we won silver for best use of performance marketing and bronze for best campaign in the B2B category. We continue to focus on getting more customers on 46 unlimited plans for further ARPU improvement. We have seen ARPU growth for seven consecutive quarters now, Q2 for FY 2023 ARPU stands at INR 135 crores compared to INR 124 crores in Q2 for FY 2022.
A growth of 9.2% year-on-year, highest among wireless operators. Our share of profit addition was higher than our subscriber market share, clearly reflecting our ability to effectively compete in the market. Moving on to business services. Business services or enterprise segment is one of our strength areas, given to our large long-standing relationships with our enterprise customers, as well as our ability to leverage from the experience of Vodafone Group in various global markets. We continue to make progress in line with our strategic strategy transformation from Q3 to Q4 for our enterprise offerings. Our planned expansion of services beyond connectivity has seen good traction. We continue to work with multiple partners to make these offerings more relevant to enterprise customers.
On IoT, we continue to maintain our strong position with innovative solutions for large enterprises a s well as for small businesses, and it continues to grow at a very healthy pace. In the smart utility space, we have an unparalleled track record in solving India's energy infrastructure by providing innovative IoT solutions and becoming a partner of choice for advanced metering infrastructure projects. We are currently working with over 55 power distribution companies and successfully connecting 3+ million meters in the country. We aim to strengthen the country's Digital India mission and transform the country's power distribution sector through our IoT solution. As part of our strategy to transform from a telco to a techco, we continue to build our cloud portfolio. We are working on a cloud strategy through a combination of our own assets and strategic partnerships in order to activate digital transformation to enterprises.
Our comprehensive cybersecurity portfolio, V-Secure, provides a range of reliable solutions that offers protection against multiple threats arising from network, cloud, and endpoints, enabling businesses to achieve their digital objectives in a secure manner. Our ReadyForNext program continues to support SMEs and MSMEs in digital adoption, transforming their businesses and making them future-ready. Since its launch, ReadyForNext has helped in affecting the digital needs of more than 80,000 MSMEs in India, offering them the right set of solutions for their digital journey. ReadyForNext campaign has been awarded on multiple national platforms like e4m Indian Marketing Awards, ET Brand Equity Business Awards, and Mint Marketing Awards. In the growing hybrid working scenario, Vi Business Plus Mobility and Communication are enabling today's mobile workforce to connect, communicate, collaborate, and do a lot more with their corporate plans.
Bundled with benefits such as data billing, advanced security, location tracking, and entertainment, Vi Business Plus provides superior customer experience with seamless and uninterrupted high-speed data. Vi Business is also an active participant in fixed data connectivity business and continues to enjoy the confidence of some of the largest multinational and Indian organizations to connect their offices and various locations through its suites of ILAN and MPLS/GMPLS solutions. Vi Business is also doing pioneering work in the space of private networks. Through our active and deep engagement with a large customer base, we aim to participate in building the private network infra in the country in a relevant manner based on customer needs. All these initiatives and efforts enabled us to register an annual revenue growth of 10% in enterprise revenue, excluding mobility. Vi Business continues to garner recognition at national and international levels.
Our carrier services recently been awarded at an APAC level in the A2P SMS Monetization of the Year Award, India, at Asian Telecom Awards 2023. At CIO Choice 2023, Vi Business has been chosen as the preferred partner of choice for Spectrum, Telecom Carrier Mobile Access, Managed Facility Services, Cloud Connectivity, and Telecom Carrier International Access on the basis of an extensive Pan-India CIO referral voting process that spans across industry verticals. At the Voice & Data Awards 2023, Vi Business has been recognized for innovation and excellence in customer service and for Vi Business Hub. The next strategic initiative is driving partnerships and digital revenue stream. We have set a strong digital roadmap for the company and have been executing the same through strategic partnerships in our continuing journey of being a truly integrated digital services provider.
Over the last five quarters, we have significantly expanded our digital portfolio with addition of music, videos, gaming, shops, education, and digital advertising. We continue to add various features to our offerings. We are proudly building most of it on our Vi app, which saw around 50% year-on-year growth in MAUs and MAU in the last year. We have seen a strong growth on each of the digital services during the year, and digital engagement on the Telco Plus solution has almost doubled from the past one year, driven mainly by Vi Movies and MTV and music. Both of which have shown strong growth on our platforms in the last quarter and the whole year. Music years, as at the end of year, saw 63% growth year-on-year. Similarly, Vi Movies and TV shows saw 72% growth in monthly active users versus December 2022.
This, of course, is on the back of various curated content and events we keep creating for our users. On the video front, our strategy has been to provide curated premium content to our consumers and continue to build partnerships with content producers to be able to deliver an enriching experience to our users. We have added new partners in the past quarter to build our content geography. Through our partnerships, we now only offer premium entertainment content to our users. Also, for the first time, we offered live T20 internationally cricket on Vi app to our users on the back of these partnerships with free. We have seen highest growth on our retail consumers in the past quarter. Now for our endeavor on digital is to read the emerging trends and build relevant propositions to be able to drive meaningful engagement and create opportunities for better monetization.
Maximum consume, as you all know, has been in huge demand with the shorts or reels that consumers can consume on the go in a very little time. We have recently launched a new channel, Bytes, on Vi app in partnership with NDTV, to provide insights and trending news and stories across globe, print, and lifestyle. As you would be aware, we have enhanced our gaming proposition with the launch of multiplayer games. On that front also, we continue to see strong growth. Expanding our gaming portfolio, we also introduced Esports on Vi app in partnership with one of the leading Esports startup, Gamerji. The objective of democratizing Esports, we offer daily tournaments to our Esports fans across some of the multi titles like Call of Duty: Mobile, Asphalt 9, Free Fire MAX, WCC 3, and more.
While we continue to build new propositions for our consumers across various digital categories, we have also worked a lot on enhancing the digital experience of our consumers on our digital assets, w hich reflects in the fact that our app ratings have improved significantly the last one year. While Vi app moved up to 3.9 to 4.3 on Google Play Store, GMT moved from 3.7 to 3.1. Our app rating is now amongst the best in the industry. Our endeavor is to constantly enhance this and deliver superior experience to our consumers. We have also talked about the launch of Vi Ads, our own ad-tech platform, which is one of our key monetization drivers.
Vi Ads is helping us drive the monetization of our digital assets as we continue to scale up through trend and are now able to drive this demand. Vi Ads is now empaneled with almost all of the key media agencies in the country, and we are part of the media plans of some of the big brands in the country. We worked with over 35 top brands in the past two quarters. While we continue to drive demand from the large agencies and brands, our focus in the coming years needs to be on building a strong go-to-market for the small and medium businesses. We will continue to have a differentiated approach to doing solution system with our partners, enabling the differentiated experience for the users, which will help us to drive customer stickiness as well as provide incremental monetization of customer people. Moving on to other highlights.
On an annual basis, FY 2023 is the first year of annual revenue growth post merger, clearly reflecting our ability to drive operational excellence despite various challenges we have faced. More importantly, we are at a profit of INR 583 billion crores and a better margin at 19.7%. Also the highest since merger and our annual EBITDA registered a growth of 22.1%. We continue to register improving total subscriber base for the seventh quarter in a row, with 1.1 million total subscribers added in Q2. Our 4G base now stands at 122.6 billion. However, the overall subscriber base declined to 225.9 million versus 228.6 million in FY 2023. We registered the seventh quarter of average daily revenue growth despite subscriber loss.
The overall average daily data volumes for the quarter were up by 2.9% quarter-on-quarter, while on a year-on-year basis, it was up by 20%. We continue to see the increase in the data usage for broadband customers, which now stands at 15.1 GB per month. We have also seen an increase in voice minutes per month by 1.6% quarter-on-quarter. With that, I hand over to Murthy, who will share the final highlights for the quarter.
Thank you, Akshaya. A warm welcome to BTU. On the quarterly performance, the average daily revenue for the quarter increased by 1.4% compared to the last quarter. This is the seventh consecutive quarter where we have registered growth in average daily revenue and daily subscribers. Revenue for the quarter stood at INR 105.3 billion crores. EBITDA excluding one-month impact was up by 3.2% quarter on quarter, at INR 83.7 billion crores, as compared to INR 20 billion crores in FY 2023. This is due to lower network expenses, partially offset by increasing roaming and inactive charges.
As highlighted by Akshaya, the annual revenue increased for the first time since merger, and grew by 9.5% from INR 387.2 billion crores in FY 2022 to INR 3,421.8 billion crores in FY 2023, supported by tariff hikes, improving subscriber mix, and improving subscription. We also see the Ind AS 116 for the year increased from INR 66.8 billion crores to INR 80 billion crores, registering a strong growth of 20.1% and the EBITDA margin at 19.7%. Both EBITDA and EBITDA margin are the highest since merger. Excluding the impact of Ind AS 116, the depreciation and amortization expense and net finance costs for this quarter stand at INR 42.4 billion crores and INR 40.2 billion crores, respectively.
The interested post India one month six depreciation, amortization, expense and finance costs for the quarter stands at INR 57 billion crores and INR 49.1 billion crores, respectively.
The capital spend for the quarter stands at INR 8.6 billion crores, making the capital spend for the entire year to be INR 30.6 billion crores. Following the conversion of the loan related to the interest on installments and India deals in the equity, amounts including INR 151.6 billion crores to the Government of India. The total debt, excluding these liabilities and including interest accrued and not due as of 31st March, 2020, stands at between INR 3, 906 billion crores versus between INR 2.49 billion crores as of December 2022. It compares of first person obligation of INR 1,207.1 billion crores and India liability of INR 655.5 billion crores to the Government.
Debt from the banks and financial institutions are between INR 113.9 billion crores and OCD amount is INR 61.1 billion crores. With this, I'll hand over the call to Neerav and open the floor for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on your telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions are set up. Participants, you press star and one to ask questions. The first question is from Sanjesh Jain from ICICI Securities. Please go ahead.
Yeah. Good afternoon, sir. Thanks for taking my question. I have two. First, from the ARPU, sequentially the growth is much lower than the number of days since you planned. Can you help me understand what is driving the like ARPU growth? Because the admission is still quite.
Sorry, you are not coming clearly.
Is it good now?
Yes.
Okay, sorry. What is driving the ARPU improvement for us beyond this previous association? Sanjay, I think ARPU is a result of multiple factors. One is that we have been focusing on quality and on renewal rates. As you get better quality of customers, the gap between the expiry and the renewal improves. That is also major factor which improves ARPU, which you can improve from the quality of our customer acquisition, which I believe last call also, and also has kind of improved the renewal rates. Several interventions are being done in that direction. As well, we have mentioned that subscribers and dual subscribers also increase quarter- on- quarter. That also is the ARPU story. In this quarter, I would say these are the main factors which have benefit the ARPU.
Got you. Second on the voice minutes, probably post-merger is a question, because the sequentially voice minutes has grown. Are we benefiting from Airtel increasing the minimum recharge from INR 99 crores to INR 155 crores? Two set of question. Are we benefiting from Airtel taking the minimum recharge to a higher level? Number two, what's our thought process in terms of realigning the minimum recharge from higher rate?
I would think that, with the point you're making, that why is the voice minutes going up? I think it has also got something to do with the number of U.S. subscribers going up. I think in the past, for some time we were kind of flat or declining, and for the last two quarters we have seen an increase in the number of U.S. subscribers.
That is kind of also helping the voice minute. I don't think Airtel's action would have impacted us a little bit, but it would not have impacted the increase in voice usage for some reason. In fact, if you look at the, if you are looking at people migrating from 99 to 99 plan, actually it should on a weighted average bring down the number of minutes per subscriber. That cannot result in the increase in the usage. I was looking at more of the potential to generate revenue, but I clearly. I mean, I think the more important metrics to look at is what is happening to post, and that is increasing and create significant improvement in the last two quarters, which is largely supported by that.
I mean, the factors for this are the same as our , that we are becoming more UL subs, we are getting better renewal rates, and if you get better renewal rates, then the usage is also high.
Got it. Our any plan or focus on realigning the minimum recharge?
Can you be a little more specific?
Are we planning to also increase the price on the minimum recharge from the existing level to 155?
Like this, let me just explain the situation. One is, we have always stated that the tariffs in the industry need to go up, and current tariffs are definitely not giving the return on capital to anyone in the industry, so they need to go up. Again, that itself, and I don't know, maybe you're not more clear in Mumbai.
To the impact, we have changed the entry-level pricing to some extent by reducing the benefit from the 99 product. The 99 product, which was earlier on a 28 days validity. The validity on that has been brought down to 15 days. That first intervention has been done in Mumbai. We will continue to observe the space and make interventions as we go forward.
Got it. Okay. The next set of question is on the CapEx. This quarter, CapEx looked quite lower than what we have been doing historically. How should we see CapEx, say, for FY 2024, as we go to the next year?
I think CapEx, as we have done in the past, currently, the CapEx that we are incurring is more of a minimum sustainable CapEx and any meaningful improvement in CapEx, which we have, we have a plan, we have a business plan here, we are in discussion with the banks and other sources of funding. The CapEx guidance, we will be able to give once the company is in place. Definitely we have plans to ramp up the CapEx, mainly to bridge the 4G coverage gap, because usually, I mean, if I were to tell you today, we have been kind of mentioning over the last several quarters, that today we have best 4G speeds on our network wherever we are present. We have the best price quality as a company that far.
As I alluded to my opening remarks, we also have the best ratings on our path. We also are currently acquiring customers, with their share of customer activations higher than our current Customer Market Share. Really, seeking, we look at anything which matters in the market is doing right for us. The only place where we are losing out is on loss of customers, which we are not able to arrest, which is a result of the fact that our 4G coverage is limited, and we have not been making the required investments, for last 1.5 years. The investments will be made and that will start making a meaningful difference to our operation.
As I said, even the loss of subscribers is getting at a net rooted, which means we are doing very well, and we are confident that with the investment coming on, we will be able to make a net improvement to our performance.
One last bookkeeping question. In this quarter, finance cost has declined sharply. Does this also have a retrospective impact on the finance cost w here we have booked the cost for the previous nine months and n ow that the government has converted the interest into equity. It's a balancing figure Q4. It's a cumulative impact of the entire year. Is that what's seeing this Q4 number? What will be the steady state finance cost for us?
Sanjesh, you are right.
Given that we continue to accrue interest from one to other, that amount goes back. From the stages, particularly what was written back to, you know, not to come to the going forward, you have that kind of interest cost impact on the basis.
Can you give us in this quarter what was the benefit of retrospective reversal of the interest cost?
About INR 30 million crores it was. Around INR 30 million crores. I t was, g enerally speaking, I think going forward on a steady state, it would only affect as a one-off. We would expect well, financing cost, which is in the cost of INR 5,300 million crores to INR 5,200 million crores appropriate.
Got it. Got it. Thanks, Akshaya, for answering all my question and wish you luck for the coming quarters.
Thank you. Next question is from the line of Balaji Vysya from Credit Suisse, please go ahead.
Hello, can you hear me?
Yes.
Yeah. Hi, everyone. Thanks for giving me the question. My question, I have basically two question. Like, it's a hot topic, actually, you know, maybe I still remember it's almost one year, and I remember, former CEO, you know, mentioning about, you know, the funding we are so near, and that's, you know, all amazing. Still, it's an old story. Like, my entire family is using Vi. Everybody, you know, is insisting on the 5G mark and where exactly are we? Are we having any option of promoting funds, or it's just the bank, or is it FI something? There's a lot of, you know, rumors in the air, actually. We never seen management speaking any clearly on that. Can you just give a small idea on what are existing?
Okay, Balaji, let me just respond to your question as much as I can. Of course, these are topics which I do not discuss publicly. You are right that this topic of funding has been for a very long period of time. As you would recall, that the funding discussions were on and anybody who is wanting to provide funding to discussion, whether it's or equity, wanted to make sure that the was implemented in total. The conversion of shares or issue of shares to government got delayed. That was the primary reason why we could not make any progress on that front. Now, the government conversion has happened in February, and post that, since all the reform, most of the items on the reforms package were implemented.
Mr. Birla has also rejoined the board in April. I would say this government conversion and these events, we have been actively engaged in the banks, and the banks we have been engaged in the past also. Promoters have contributed equity in the past and they are also ready to contribute some more equity. The third leg of funding has to come from external investors to bring in equity. That discussion, I would say currently multiple discussions are on and these discussions have come actively in the last one month since the government conversion. We are progressing well on these at least three discussions which are going on and we expect to make progress in that and complete funding. We are moving in the right direction.
I would say that the implementation of the reforms package was a prerequisite for any conclusion to happen. That having happened, we are now trying to work towards getting this to a close.
Okay. Just a subsequent point to the same thing, like, I think, we got this spectrum allocation, you know, five-year allocation last year, August. We have an obligation to, you know, deploy, at least in a minimum to deploy, August. Do we have a target by, you know, we can plan and, like? How are we looking at that part, actually?
I think MRO is more a compliance requirement, and we'll work on that. I think our strategy as a entire family is our strategy, connection. We are not focusing on the MRO compliance, if you are looking to provide the coverage. As you can say, by our architect and any 5G will be dependent on new funding. The plans that we have shared with the banks and investors include 5G investments and good amount of 5G coverage. Definitely 5G is a part of our plan, and we'll be executing and implementing that immediately once the funding is in place.
Okay.
You will have a 5G connectivity once we start investing.
Okay, just the last point on this, you know, like we had a recent statement from DOT Chairman, like, you know, we are expecting a revival plan within one month. Like, how we can provide more clarity, like, how is the consideration of DoT going on, and, you know, is there any discussions and advanced statement, you know, revival plan, which DoT is expecting from the management?
No, no. I think we always remain continuously engaged with DoT. DoT is the largest stakeholder in our from all points of view. We are constantly engaged, and we are updating them on a regular basis. As I mentioned that, currently the most important thing is to, I mean, let's say there are two things. One is most important thing is that we become our operation. The operations continue efficiently, and I think I've alluded in my opening remarks and the response to Sanjay's question, that we are actually operating efficiently and getting the right KPIs progression as far as operations are concerned. But as we said, that for any meaningful improvement to happen in the performance, investment is necessary, and that remains a focus area for us.
We are working on that and DoT is constantly updated on the actions we are taking to get that up.
Okay, thanks. Thanks, Akshaya. Thanks for, you know, replying to all those queries, you know, promptly. Thank you.
Thanks.
Thank you. Next question is from Vivek Pharikal from Ambit Capital. Please go ahead.
Hello. Thank you so much for the opportunity. I can see that your sales and marketing spends as well as churn, these were moderated compared to where it was, say, in second quarter and third quarter. I sure would appreciate your comments on the on ground direction with respect to, you know, rotational churn and also the, you know, three players, how they are behaving in the industry right now as far as, you know, customer acquisition costs are concerned. That is question one. The second question is, now that the tariff environment has been stable for a while, last tariff hike was taken in December, how are we thinking about the tariff outlook for the next six to nine months?
Are there any considerations like, potentially, inflation subsiding or anything that the industry is waiting, to really, take the next step in increasing tariffs? Thank you.
Your first question on the sales and distribution spend. It is right that, I think I've alluded to this in my last call also, we have taken a number of interventions to reduce the, I would not say reduce the aggression, and I would just try to differentiate between two things. I think you've also seen that other players have also kind of been trying to see. I mean, at some level, if you see the industry spending anywhere between INR 10,000 crores to INR 15,000 crores per year towards customer acquisition costs, and what you see as a net addition to the industry is very little. It is very clear that there's a lot of efficiency involved, which is just rotational churn. That needs to be addressed. That goes without saying.
What we have been doing is that we have been looking, and we have done lots of analysis and lots of detailing to see where are these coming from, and what are the cohorts, which by acquiring, we are actually not on a long-term basis, they are value destructive for us, so they are giving us negative cash, if you do an analysis over a six month or a 12 month. We have taken action to stop doing business with partners who are contributing to loss rather than adding value to us. While we continue to be aggressive in the market, we are taking very conscious and deliberate actions to eliminate acquisition as a cohort. You can't do it at an individual level but cohorts which are loss-making for us, we are eliminating that.
We have also taken some interventions to see that incentives being paid to the channel partners and all are done on a more realistic basis. Sometimes there is a bit of over-exuberance in incentivizing this channel, and we are seeing that what is reasonable and what is not. We have also kind of looked at rotational churn within the MNP segment also, and we found that generally it is believed that rotational churn is in the fresh segments in MNP where is optimal rotation. Because things have happened or developed over the years and especially in the last one year, we have also observed a lot of rotational churn happening in the MNP segment, and we've also kind of identified actions for that. Those kinds of acquisitions are not incentivized.
You kind of, reduce the incentives which is being paid for subscribers who are having churn rotation. Sure. I would say many initiatives have been taken. We also see some initiatives being taken by the competition. I do believe that the industry needs to move in a direction, where we completely acquiring customers on merit and not through the higher cost route. We continue to work in that direction. Did I answer your first question completely?
Yes, this is very, very helpful. Thank you.
Can you just repeat your second question? Tariff. Okay, sorry. It's all about tariff.
Tariff side, are there any considerations that perhaps the industry is looking for, like perhaps inflation modeling or perhaps smartphone prices coming down to take the next steps as far as the tariffs are concerned, given that the last hike is now fully in the page?
Okay. I don't think it has to do anything with smartphone prices, and I cannot speak to the industry, but I can speak to us. Let me just get to the first main, I think, important point. Tariffs need to go up, and I think as I've also mentioned in the last earnings call, if you look at any, I mean, telecom is today an essential services and probably the cheapest price potential service, which actually brings you the maximum benefit. If you look at electricity, for example, there is a base charge because whether you are using it or not, the service provider incurs a cost of providing infrastructure to the customer. There has to be a minimum charge for availing the service, whether you actually use it or not.
I think that is the basic concept of our entry-level pricing, as that should be determined in that fashion. More importantly, the construct of the industry has been fairly distorted, and I do believe that this factor, which is impacted the right assets in the industry, is the trend of daily limit, 1 GB per day or 1.5 GB per day. Whether you use 5 GB in a month or you use 28 GB in a month, you pay the same, which does not happen in any industry. As I said, potential services, which is available, for example, you take gas or anything of that nature. We need to move in a direction where there is a fixed charge for availing the connection, and then you pay based on usage. Usage would of course, be a realistic type pricing.
We constructively need to move in that direction as an industry. In terms of our position, I think, you are aware that, we have lost some subscribers because of lack of 4G coverage primarily at this point of time. We are watching this space. We would be happy to follow any, tariff, improvement actions by the market leaders, because we do believe that the tariffs need to go up. I think at this point of time, we will not be able to take the lead on that. However, as we get to back to the investment mode and we are able to expand our 4G coverage, we could also take the lead. That goes without saying that there is an essential need to get the tariffs to reflect the cost of infrastructure.
This is helpful. Can I just ask one last question on CapEx?
Yeah.
I understand that you are now only doing CapEx that is, you know, bare minimum or just necessary to do, right? What we are seeing is that your CapEx on an annual basis is much lower, and it has been declining every year for the last four years since the merger. Now, your subscriber numbers, your revenue trends seem to be very healthy. How should we interpret this? I mean, on the one hand, your CapEx is declining continuously, and on the other hand, we are seeing that your subscribers are now stable, almost, or only marginally declining, and revenue trends also seem to be fairly healthy, even if you compare it with previous.
Thanks for recognizing that. I think the way I would describe the thing that as long as the traffic growth is there at existing location, the major part of CapEx comes when you have to expand coverage. As the pricing models in the industry have evolved, that you require more capacity on the same side, the costs are not very much. Most of the time you are just buying additional licenses, the hardware is already paid for. Really speaking, even in that minimal CapEx that we have been incurring, we've been constantly increasing our capacity, and that is clearly reflected that as our traffic has grown, we still continue to have the best 4G download speeds in the industry wherever we are operating.
When I say what we are ensuring the minimum CapEx, we are ensuring that our customer experience wherever we are operating is not impacted. What we have not been able to do is expand our coverage or invest in 5G, which are the two main things which still needs to be addressed by the new company.
Well, thank you. Thank you so much for the detailed comment. All the best.
Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go on.
Yeah, thanks for the opportunity. My first question was on the 5G. What's the device penetration amongst your subscribers, and are you seeing any increasing trend amongst 5G customers? Have you done any survey on the customer expectations regarding 5G, and how do they see not having 5G, your thoughts on over the next one year, how do we see it impacted?
Thanks, Kunal. I think 5G devices on our networks are in the ballpark of 30%. In terms of customer, I mean, until now, has there been any impact in terms of churn? We've not seen any change in the trends, and in fact, it's what we see a reduction in our overall churn. Definitely, the latest, whatever large investments that we made, our competition and 5G, that has not impacted us. Definitely, at this point of time, it is not impacting our churn levels. Currently, also, there are multiple challenges in ways of 5G, as you are mostly aware, that there is an issue with battery.
After earlier challenge was that consumption went into the competition of giving 5G data for free, which again, is in, I mean, good for the consumer, but definitely, as I've been mentioning, that competition is not sustainable. Ultimately, 5G data will have to be charged. If that starts getting charged, the challenges of what is the benefit in terms of experience versus what is the additional data being consumed, because as is the case, generally speaking, for using 5G on your Android device, you will not see a particular difference for the same application. Video is the highest consuming highest data consuming application. Your speed may be fast, you will just be video at the same speed. If that experience cannot change, if there will be to measure the speed, find the difference in experience.
Generally, you will not find a difference in experience or a discernible difference in experience. I think from an experience perspective, it is one thing to make a significant difference, and there are currently even issues of 5G introduction, but I think these are a matter of time, these will go away. We will need to invest in 5G because everybody who has a 5G and 5G networks utilized, they would want to Whether they use it or not, customers would want to have the option of having 5G. I think it is not having any impact today and I don't see it having an impact in the next few months. Definitely, if you looking over a longer period of time, everybody needs to have a 5G option.
What should be the direct and direct of that coverage is something which we have to be iteratively determined over a period of time. We are working on having a 5G option and then expanding it further.
Yeah. In what you say, what is the priority? Would you look to expand 4G coverage or would you start with 5G?
Both, both together.
My second question is on bank borrowing. It's down almost by INR 700 crores last one year. How has been the experience dealing with banks or get the expectation well, what are the user guarantees to be able to get a roll forward of loans? It does not seem to be happening right now. Also, how much is still the next step?
I think, we have never been talking about the roll forward of the loans. All that we have been discussing with the banks is new working capital investment. We continue to pay all our debt as it falls due, and that is what we have been doing. As I said, that bank funding, which I explained in detail earlier, was not progressing because of the government conversion had not happened. Both are the discussions were have been initiated, so there was discussion between the UPT type of and the bank 50 type of, and that work is on. As I said, we made a lot of progress in the last one month following the conversion, and we are progressing in the right direction as far as that is concerned.
Our debt servicing in FY 2024 is about the same level as we had in the last year, and we call back about INR 8,000 crores for the full- year. It's not different from what we had last year.
Total borrowing, if we remember the number, it is about INR 11,000 crores. Talking about your external borrowing, of that, INR 8,000 crores get paid off within FY 2024?
That's right.
Okay. After that, like, assuming you are able to make it payment, then the external borrowings will be almost like INR 80 crores?
Actually, this is really look at it today, and we have had some accumulation of collectibles because we have tried to prioritize the debt servicing. As you are seeing, debt servicing has led to about INR 11,000 crores sometimes, or the trial is also INR 11,000 crores. In some ways it is a single term, and once we are out of that period and the debt servicing then starts reducing, then we will be able to use the generation from operations to settle some venues.
Understood. Lastly, on the post paid, are you seeing large customers being approached for competition? We've seen some new plans being rolled out on post paid. How do you see any impact, in the post paid market?
I would say, I think as far as what is happening on the competition front, it is business as usual. Of course, obviously, there has been some aggression in the family pricing. Family or no family, you can get into a family plan, and that has brought some aggression into the postpaid plans and the postpaid pricing. I would say that has been the only variation on the postpaid. Otherwise, I think it is doing well, and we are also kind of doing. I mean, postpaid is a particular for us. We have done some changes within the structure in which we understand the business, and I expect to see a better performance in postpaid.
Did the postpaid ARPU stable?
Yeah, ARPU are generally stable.
Okay.
I mean, as I said, there is some dilution happening on account of the family plans which have come in, and we just have to kind of be a little cautious about this that it's becoming a way to discount the price. Let's see, because in early it will be like two years, and until now we have not seen any solution on the post paid ARPU.
Understood. That's it. Thank you.
Thanks. Bye.
Thank you. Next question is from the line of Aditya Suresh from Macquarie. Please go on.
Thank you for taking my question. I just have one question for Mr. Birla joining the board. I just want to understand, has there been any change in your priorities since he's resumed? The other kind of related piece to that, in terms of a balance between kind of spending on marketing and branding compared to spending on premises to other companies. How do you kind of balance those needs? Thank you.
I'm sorry, I didn't hear your last part. The audio was not pretty clear. If you want to speak up and continue, get on with the second and repeat your question.
Sure. Last bit is simply about in terms of balancing expense between marketing versus, say, payments to tower companies and the other suppliers, marketing view of coming down to the current operation stability. How do you balance these different requirements in view of certain functions? Thank you.
I can answer your question of any change in priorities after Mr. Birla has joined the board. I am letting you assure you, sir, even while Mr. Birla was on the board, he has been actively engaged and involved in the affairs of the company as he was when he was on the board. His level of engagement has not been impacted. He has been on the board or not been on the board. To that extent, our priorities is on doing whatever needs to be done to keep the company and perhaps investing to the entity. That is not impacted by Mr. Birla joining the board. With coming back on the board, there's a lot of confidence in our discussions with the investors and banks. I'm definitely healthy enough on trying funding.
On the second question on your prioritizing, currently, if you will see, we are largely paying all our OpEx payments. What we are not able to incur is the OpEx payments. I think that is where we are operating now. Within that overall structure, we kind of prioritize our payments to ensure in the best interest of our operations. I don't think we have to kind of get between whether I see the tower company or the marketing spend. I think it is all in the normal course of business. I think managing operations, we are doing well. We basically need to get funding for the purpose of making investments. That is most important.
Thank you.
Thank you. Next question is from the line of Gaurav Rateria from Citigroup. Please go ahead.
Yeah. Thank you for the opportunity. I have two questions. The first one was on network topics. What is the reason behind the potential decline and sustainable rate going forward? That was the first. The second was on trade table, so that people has been coming down for the last couple of years. Again, what is this trade shape? What you were saying earlier, we assume that you have been prioritizing then things to some extent, and which is why the service is about declining over the last couple of years. Thank you.
Let mostly reply to the first question. I think on the trade table, this quarter it is appearing as less because in some ATC tables have been converted to an OCB structure for the transaction of both INR 1,600 crores. I think this quarter the payment reduction is largely coming from that. Otherwise, as we are saying that we kind of are remaining flags on our tables, they are neither decreasing nor increasing. They're largely flat because at a minimum, and effect is largely being handled. There could be some timing variations here or there, but that is largely the way we are operating, and let us mostly to get the details on the next call.
To follow up the network, okay, largely due to two days, less than Q2 versus Q3, and also looking at the effect, you know, of this quarter. At the same time, we have, as I alluded to earlier, there have been a few right actions should happen. Just accordingly, after effects of this one is still declining in this process.
Okay, this number should go back up, maybe to last quarter levels in Q1.
May not, I mean, may or may not, obviously, the QFC effect will obviously go away as the summer session, and because, you know, if you're able to, I mean, do better than that, you know, it may, it may not really have that back. If consumption is higher and they are interestingly affecting, that is possibly the number will go up.
You're broadly right, that the current quarter because of, I mean, Q3 would be a more representative result for assessing what could Q1 be like.
Sure, thank you.
Thank you. Next question is from the line of Hemang Khanna, from Nomura. Please go ahead.
Hi, sir. Thank you for my question. I have a question. In this, we saw, you know, the probably the lowest subscriber decline over the past six months. You just shared some other how detail and may have also handled. The second is on the DUC cases, you mentioned about QTC. You also had numbers for 2025.
Sorry to interrupt you. We are losing your audio. Can you come in a better reception area, please?
I think you will have to repeat the entire question, please.
Yeah.
Sorry, am I audible ?
Yes.
Yeah.
The first part was on the subscriber loss, even the lowest rate in probably the last six months, could you just help us understand how Airtel and Vi have also handled? Secondly, on DUC cases. For FY 2023, you mentioned about INR 80 crores billion as the open cases. Could we have FY2025, FY2026?
I think as far as the subscriber indicators for XL and May, I will not be able to give you any guidance right now. I think that you'll have to wait for the results to be announced. The other question you were asking, the licensing?
Yes.
I think basically what we said is that our outstanding at the end of this is about INR 11,500 crores. We have about INR 8,000 crores, which is due in the next quarter. What is left is a very small part of it, which is INR 3,500 crores of main debt left, which will be paid in effect, INR 55 crores. I don't have the exact number. Ultimately, at that point of time, the debt servicing is still very small.
Thank you very much.
I'll end the conference. Mr. Akshaya Moondra for closing comments.
Thank you, Neerav. 2023 has come to an end. There are many positive indicators as we move to next year. As highlighted in my opening remarks, FY 2023 is the first year where we have registered annual revenue growth post-merger, despite various challenges we face, clearly reflecting our ability to effectively operate and compete in this market. Our end of the year has registered strong growth of 74%, the highest growth measure since the March at 19.7%. We have reported seven figures of potential growth in several key metrics, including R2 and logic subscribers. Our year-on-year R2 growth of 9.8% is the highest among FY 2022.
All of this is possible only because we are focused on providing great data and work experience. Are building a differentiated digital experience of adding several digital offerings in the recent months. We have issued equity shares to the government, consequent to conversion of interest related to government of AGR and Spectrum D. We continue to engage with lenders for further debt fundraising, as well as with other party for equity or equity link fundraising, to make required investments for network expansion and 5G rollout to our subscribers. We have had the best 4G speed, best voice quality, best app rating. Our customer acquisition share is higher than our current CMS. Riding on this foundation, we have been improving our performance in the last seven quarters with limited investment. We are confident with the investment coming on stream.
We will continue to make more meaningful improvements in our overall performance. Thank you all for joining this call. Have a good day and a good weekend ahead of you. Thank you.
Thank you very much. On behalf of Vodafone Idea Limited, this concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.