Vodafone Idea Ltd
NSE:IDEA
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Good afternoon, ladies and gentlemen. This is Margaret, the moderator for your conference call. Welcome to the Vodafone Idea Limited conference. [Operator Instructions] We have with us today Mr. Balesh Sharma, CEO of Vodafone Idea Limited; and Mr. Akshaya Moondra, CFO of Vodafone Idea limited, along with other key members of the 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 the 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 discussions on today's call may include certain forward-looking statements and must be viewed, therefore, in conjunction with the risk that the company faces.With this, I'll hand the conference call over to Mr. Balesh Sharma. Thank you. And over to you, sir
Thank you, Margaret. On behalf of Vodafone Idea, I welcome all the participants to this first earnings call post completion of the merger of Vodafone India and Idea Cellular. I thank you all for taking now the time to joining us today. While I've met many of you over the last 4 or 5 months, I assume there would be some on the call that I have not met, so a minor introduction. I am Balesh, I have been working in telecoms now for about 23 years, of which, about 15 years-plus are with Vodafone. I worked with Vodafone in India and then also in Malta and in the Czech Republic and came back to India in 2017, March, as the COO of Vodafone India and have been the CEO since the day of inception this 21st of August for this new company, the youngest telecom company in the country, and loving every bit of this new, exciting opportunity in front of us. Moving on to the results. Yesterday, that is, on 6th of February, 2019, our Board of Directors adopted the audited results for the third quarter of financial year 2018-19. These are the first full quarter results for Vodafone Idea. The detailed press release, the quarterly report and audited results have been uploaded on our website, and I assume you had a chance to go through the same.In my part, I would like to share, first of all, an update on the various strategic initiatives we talked about when I met many of you in November at the Analyst and Investors' Meet in Mumbai. I'll talk about those -- the strategic initiatives. I will then talk about the operational highlights of the quarter 3. And before -- I'll ask that I hand over to Akshay for sharing the details of the company's financial performance for third quarter.So a bit about the market. The market, the operating environment continues to be challenging. However, the industry is now consolidated into 3 private players and one based around a [ stock MTML ]. The offerings of all the 3 private players are now towards enabling more and more data for all the Indian subscribers across. Massive investments are therefore going in, and that is ensuring that these offerings that we are making on data are then supported in the marketplace. Vodafone Idea has the largest spectrum portfolio, large network investment in the form of network sites and optical fiber, wide distribution reach and customer affinity for its 2 strong brands, Vodafone and Idea, and thus, is very well positioned to be successful in the new operating paradigm in the marketplace.We have embarked upon this new challenging phase with a very clearly defined strategy, having no dependencies on external factors. The time between the merger and -- the merger announcement and the merger completion allowed us to meticulously plan and create a blueprint to improve our revenue, profitability and competitive position in the marketplace. The outcome of this exhaustive planning is a well-defined 5-pillar strategy: First being exploiting the integration; second, prioritize investments; third, drive output from simplification; fourth, focus on fast-growing revenue streams and partnership approach to drive value; and fifth, to strengthen the balance sheet. This is the blueprint I shared with you in November in the Analyst Meet. Let's see how we are doing on each of these. First of all on the integration. Before we started on interrogation, most of the industry experts announced their -- highlighted that executing network integration will be a massive challenge. Yes, it is tremendous. Yes, it is complicated. But with the planning and with the execution efficiencies we have brought in, we have been -- we are happy to share that we are in line with our stated mantra of radical exploration of integration. We move much faster than expected and seamlessly so. We have already integrated 8 service areas of West Bengal; Andhra Pradesh, except Hyderabad; Haryana; Madhya Pradesh; Himachal Pradesh; Assam; Nashik and J&K. Here, we successfully completed the consolidation of our spectrum and radio access network. Customers, therefore, of both the brands in these areas can now enjoy a unified experience across 2G, 3G and 4G. They take benefit of the enhanced capacity and therefore improved speeds. It also improves, in these areas, the coverage for the smaller of the 2 brands because customers can now get the coverage typically of the better -- of the larger network brand in each of the service areas.In addition to these 8 service areas, we have -- we are now offering unified 4G experience in Bangalore City, but with 2G in Bangalore still not unified. But 4G layer is completely unified, and therefore, both Idea and Vodafone brand customers get access to the same 4G network. In other circles as well, the network integration is taking place on a fast pace, but by a cluster-by-cluster approach, and subscribers of both the brands are therefore gradually moving to a much larger and better network.While the network integration is underway, ICR arrangements between the 2 brands, Vodafone and Idea, allow us to offer a better coverage to our customers in the interim. Furthermore, the process of spectrum consolidation in -- across the country has resulted in enhanced level of capacity and improved customer experience throughout -- wherever there was an opportunity. We also announced the capabilities of some of our 900 megahertz sites to dynamic spectrum refarming and refarmed 2100 megahertz spectrum from the 3G to 4G on selected sites. In Mumbai, for instance, we have consolidated the liberalized 1800 megahertz of Vodafone and Idea and carved 1 additional carrier for 4G. This has improved the user experience of subscribers on Vodafone network and mobile. Moving from network towards operational integration. We have completed pretty much the people integration for all managerial layers right up to the level 6. On the zonal side, we have moved -- the offices side, we moved the zonal and circle offices to work -- of Vodafone and Idea to a single location across the 22 circles and across the 400 offices. So people no longer sit in Vodafone or Idea formations, they sit either in the same office or split in 2 offices, but split function-wise rather than brand-wise. So technology guys sit in one place and finance guys in another and so on. So that's been completed. We've also initiated the integration process of our distributors, retailers, service stores and service centers. The integration process on this front had some challenges because redefining geography means, for each of the distributor, you need to realign the retailers under them and their accounts and -- for the final settlements of each part has to be completed. But happy to report that we are almost done for the distribution integration countrywide by the end of January. And on the retail, which is your branded stores footprint also, we are progressing very well. And we expect to complete the operational integration, which is both distribution and retail outlets, by March 2019. Moving to the second pillar, which is about prioritizing investments in profitable areas. We have segregated districts in India based on their growth potential and revenue on EBITDA contribution to our company, as I shared in the last meeting. Instead of following the conventional approach of service level -- sorry, circle-level prioritization, we are now at district-level of granularity. On the basis of such analysis, we have identified certain high-potential districts where we are targeting to have a full coverage, large capacities and best-in-class customer experience. And gain, therefore, more than just the fair share of the market, which means basically creating fortresses or moats around our customers in these areas. And if you remember my last presentation, these areas, which we call the quad A and B, actually amount to about 140% of our overall EBITDA. In the nonprofitable districts, which is the quad C and D, where we have challenge in terms of our EBITDA, we have -- working towards less capacity utilization by bringing the network of both the brands on to a single network and therefore optimize the cost of running the 2 networks, which means getting 2 revenue streams to be riding on 1 single network and therefore move towards an EBITDA strengthening of these markets and therefore overall in the country. During the quarter, we have already exited -- which is, in December, we already exited 5,400 low-utilization sites in these geographies. We've also de-loaded our equipment from 21,000 colocated sites. So if we recall, on day 0 or before day 0, we gave notices to the infrastructure providers to convert, on 66,000 colocated sites, our tenancy, 2 tenancies into a single tenancy, with the additional equipment of the second brand being converted into a loading rather than additional tenancy. But from those already 21,000, we managed to remove equipment from there as well. We've added 11,123 4G sites during the quarter. Of which, 9,066 were TDD sites, boosting our capacity. And as a result, we are progressing very well on the capacity creation front and intend to increase the capacity to 1.5x by March '19 and 2.5x by March '20 compared to September '18. This is absolutely in line with the guidance we had given in the last quarterly discussions. This basically means in the quarter of October, November, December, third quarter, we've carried 29.4 billion megabytes of data every day. Further, we continue to augment our data capacity, and that reflects an incremental 2 billion megabytes project capacity that we have added already by January in itself. So well on track on creating -- capacity creation. Moving on to coverage. As we redeployed overlapping 4G sites and integrate the network, our coverage continues to improve. During the quarter, we have improved our 4G coverage from a circa 40% of the contained population that Vodafone brand was servicing with 4G, we moved it to 62% for the Vodafone brand. And for our 49% that the Idea brand was servicing, we now cover 60% on the Idea brand of the country's population. This basically means about 215 million population covered for the Vodafone brand to address and about 140 million are for the Idea brand to address, and therefore opens up a lot more opportunity for us to sell our 4G to new customers as well as to our existing 2G base in those geographies. We are thus well on track to achieve the 4G coverage of more than 95% of population in high-potential districts by March 2020. Again, turning to the guidance that we had given, we are very well on track for that as well.I would also like to reiterate that post merger, the overall 2G coverage for both the brands has improved to greater than 90% of the population of the country. To remind you, this used to be circa 82% to 85% of the 2 brands, which has already jumped up to a 90%-plus. This is significant, and both the brands now cover, therefore, a much larger population for selling the basic telephony services to. The third pillar we talked about was ARPU improvement via simplification, rationalization and upselling. In India, with our strategy to simplify customer offerings, we've discontinued various recharge vouchers and have launched recharge vouchers at the price points of INR 35, INR 65 and INR 95, offering bundled voice and data to the customer for a period of 28 days. These service warranty vouchers are designed to incentivize the subscribers to opt for higher-value recharges. So there's an offering, and therefore, we can take the customers up from INR 35 to INR 65 to INR 95 and ultimately to unlimited vouchers of various denominations. Also, instead of having multiple offerings across 22 circles, for new SIM cards to be secure, we've created a common acquisition plan across the circles at INR 76. This basically means that existing customers get a better deal than the new customers. If a new customer wants to get a similar deal, must then therefore buy a SIM card at a price point of INR 76. Therefore creates better loyalty with the existing base and stops the proliferation of low-quality acquisitions and therefore higher churn. So we are kind of arresting the high-churn -- high-growth, high-churn model to bring it down to a better base management and also a better management of the cost of acquisitions. So during the quarter, we have aligned, therefore, our postpaid and prepaid plans across the offerings by both the brands. That's on the ARPU improvement part. We talk about the number results a bit in a while.The fourth pillar we had talked about to you was going -- was focusing on the fast-growing revenue streams and partnerships to drive value. And on that, happy to report that Vodafone Idea is the leader now of the enterprise mobility express, and we've been focusing on growing segments of IoT solutions, cloud offerings, carrier services, et cetera; while leveraging Vodafone Group's global enterprise relationships, we are focusing on trying to do all the nonmobility stuff as well. In fact, you may have noticed in the media 3 days ago, we have now announced NB-IoT commercial trials of proof of concepts in 4 Indian cities with a clear plan that as the availability of a device in an ecosystem develops there, we will be rolling out NB-IoT across the country. We continue to add customers on the enterprise side, including government contracts and through our wide range of mobility and nonmobility services. During the quarter, we've added significant number of smart meters connection on IoT. We provided connectivity to the contact center for one of the largest private banks. We've delivered large capacities to the digital and e-commerce companies. So enterprise business continues to do well, both on mobility side and on nonmobility side or incremental new business side. Moving on to the partnerships that we talked about. So very clearly, we have stated the agenda of this new company, it's not to try to own the entire value chain, but to focus on what our strength areas are, and I have described them. Our strengths, we consider, are: The subscriber base that we have; the deep analytics of the subscriber base; our physical and digital reach; our capability to be able to collect money from these customers in prepaid/postpaid model, which we can charge customers through per minute, per second, per viewing, per episode in whatever way possible, so billing capabilities. And therefore, all the strengths is what we bring up, and of course, the enterprise relationships. This is our strength, we stick to this and improvise on these strengths. However, we act as a branch to the rest of the world and connect our customer base to the best-in-class products while partnering with the best in the world. We are continuing with that agenda, happy to announce already that further to the fact that we were the first ones to bring in Netflix and Amazon Prime to provide program content to our base. We have now signed up this quarter with hoichoi and with Sun TV to provide large bouquet of digital content to our subscribers. The best of south content of Sun NXT is now streaming on Vodafone Play and on Idea Movies on TV. Sun NXT app contains 50,000 hours of content, 30-plus live channels and 4,000-plus movies and unlimited shows in all 4 major south languages, which is Tamil, Telugu, Malayalam and Kannada. In addition to the above, we have more than 10,000 movies and 3,000 (sic) [ 300 ] live TV channels on Vodafone Play and more than 8,500 movies and 400 live TV channels on Idea Movie and TV. So we're doing well on content. Moving on to the music part. We are sunsetting the Idea Music app of ours, and we will come up very soon with an offering which will provide best-in-class music streaming services, yet again through a partnership that we are in the final stages to close with. We will keep you posted more on the same. But music is a big priority for us, but we will work on that as well through partnerships. Again, through partnerships, we also are focusing on leveraging the assets we have in the form of certain areas and looking for partnerships in financial services areas, e-commerce areas, practically anything that could be of value to my base, we are looking for partners to be able to connect and bring, therefore, value to the base as well as creating value that can then be shared with the partners in the value chain.We similarly also partnered with the handset manufacturers to provide better value proposition to various customer segments, as per the need of the customer segments. Moving on to the last part of the strategies that we talked about, strengthening our balance sheet. The company continues to look for various fundraising and asset monetization initiatives to strengthen the balance sheet. Our board has approved rights issue of INR 250 billion on January 25, 2019. Both the promoters, Vodafone and Idea -- Aditya Birla Group have reiterated their support and indicated their willingness to contribute up to INR 182.5 billion. We expect to conclude this exercise as soon as the regulatory approvals come through.The merger of Bharti Infratel and Indus Towers has already received, as you know, the CCI, in February, is expected to close. Therefore -- sorry, CCI in SEBI, and therefore, is expected to close in quarter 1, apologies, of FY '20. This is the second monetization of -- the monetization of Bharti and Indus Towers we're looking at, and the first thing we talked about are the fiber monetization. Happy to confirm the company continues to pursue its plan to monetize 158,000 kilometers of intra-city and intercity fiber. We continue to work on the asset separation and then will look at partnerships and monetization opportunities there over a period of time. This is about the strategic priorities. Moving then off the results of these priorities, therefore, the operational highlights for the quarter. The results of all these initiatives, in line with our strategy, has already started to reflect in the numbers. The introduction of service validity vouchers on a national basis during the quarter, which required customer to make a minimum recharge of INR 35 rupees for 28 days validity, has had a positive impact on our revenues and on ARPU, which you may have noted yesterday. The rate of quarterly revenue decline has therefore been restricted to 2.2% compared to 7-point-some percent decline in the previous quarter. The daily revenue has also improved in these 2 consecutive months, which means December over November and January over December. The daily run rate of revenues have improved or is better or is a positive trends, which is a clear indication of the positive impact that this minimum recharge threshold that we are implementing. With the introduction of these vouchers, as expected, we've lost some 0 users, incoming-only customers or the minimal ARPU customers. They consolidated their spending from multiple to a single SIM, leading to a reduction of 35.1 million customers in our reported base, which is -- which has also been announced yesterday. Again, pretty much in line with the expectations that we set and pretty much a cleaning up of the nonusers or low end of the user base. Moving on to the market. Post withdrawal of the [ device ] activation process by our very honorable Supreme Court, Vodafone Idea has successfully introduced digital activation process to bring customers on board instantly. The new customer acquisition process is paperless and is absolutely hassle-free and therefore has been well-received by the market. So that's already been implemented. On the 4G front, we continue to witness strong traction with 9.5 million 4G subscriber addition last quarter as compared to 8.4 million in quarter 2. So there is an improvement of run rate. This was possible because of improved network coverage and capacity and direct simplification. In fact, in the last 12 months, we've almost doubled our 4G subscriber base from a 38 million in December '17 to 75.5 million in December '18. As we continue to now improve our 4G coverage and capacity through the integration of our networks and through injection of fresh CapEx, we expect to maintain positive momentum and gain higher share of the 4G subscribers. To sum up, our strategy is being followed to the core and is producing good results, whether you look at the integration or acceleration of it, and the results acceleration, which is -- I have already talked about the network part of improvement in capacity and coverage. Akshaya will talk about in a while about the cost improvements of the synergies that we are noticing here. Privatization of investment is also clearly visible with the exits that we're making. ARPU simplification, that's for the new sets in the market are producing good results. We have been focusing on the enterprise business and our partnership strategy seems to show good results. And good improvement in our content strategy already. And we stand on our way to strengthen the balance sheet. Over to Akshay, our CFO.
Thanks, Balesh. A very good afternoon to participants from India and a good morning or evening as applicable to overseas participants. Let me first clarify that all the quarter-on-quarter comparisons that I will talk about are based on pro forma figures for Q1 or Q2. The revenues for the quarter declined to INR 117.6 billion in Q3 FY '19 as against INR 120.2 billion in Q2 FY '19, mainly on account of customer migration to lower ARPU. As explained by Balesh, we have started seeing month-on-month daily revenue improvement from the month of December, which turned -- which in turn has also arrested the overall quarter-on-quarter rate of revenue decline in this quarter to 2.2%. During the quarter, we have achieved significant benefits on cost reductions. Our overall operating cost, excluding license fee and spectrum usage charges and roaming and excess charges, have come down by approximately to INR 7.5 billion as compared to Q1 FY '19 on a pro forma basis. This is equivalent to annualized cost reduction of INR 30 billion. EBITDA for the quarter improved by 16.3% over previous quarter to INR 11.4 billion primarily due to cost reduction. We had earlier given a guidance of to INR 84 billion annualized cost reduction by FY '21, and we are progressing well to achieve this plan. The depreciation and amortization charge for the quarter stands at INR 47.7 billion and interest and financing cost net stands at INR 26.1 billion, which includes credit of INR 870 million on account of ForEx gains.Exceptional items during the quarter are INR 8 billion. These primarily include integration and merger-related costs of INR 7.5 billion and provision for impairment of assets of INR 350 million. Out of INR 7.5 billion, site exit costs are INR 7.3 billion. This includes additional provision of INR 3.8 billion over earlier provision of INR 10 billion made in the previous quarter on exits of colocated tenancies based on discussions with key infrastructure vendors and the effects of further exits during the quarter of INR 3.5 billion. The total amount of INR 13.8 billion provision with respect to colocated tenancies includes recognition of INR 1 billion as an upfront cost on account of staggered tenancy exits on towers sold by us, representing the difference between higher cost of 2 tenancies and the cost which should have applied had the exit happened on the date of merger.CapEx for Q1 FY '19 -- sorry, CapEx for Q3 FY '19 was INR 11.7 billion. We have finalized all our major supply contracts post the merger, which has resulted in slower CapEx deployment in this quarter. However, we are accelerating our deployment now with focus on reuse of equipment. And our combined CapEx guidance for FY '19 and FY '20 remains unchanged at INR 270 billion.Net debt as of December '18 stands at INR 1,147.6 billion as against INR 1,125.1 billion in September '18. The cash and cash equivalents balance as of December '18 is INR 89 billion. We have initiated a process of rationalization of our subsidiaries. During the quarter, we have completed merger of Aditya Birla Telecom with BIL. Further rationalization is in progress.With this, I hand over the call back to Margaret and open the floor for questions
[Operator Instructions] The first question is from the line of Sachin Salgaonkar from Bank of America.
I have a few questions. Number one, when we look at the subscriber numbers, those continue to decline. Can I check, is it entirely driven by the minimum INR 35 pack? Or something else is driving it. When do we see this subscriber base to be stabilizing? And generally, I mean, for in case of Bharti, of course, we saw a sort of a good ARPU uptake. So should we expect as of now some of these subscribers move, the ARPU uplift should happen? And second question, is it possible to quantify the general synergy benefit impact in this quarter? And what was more like the net interconnect for you guys? And actually, how should we look at the EBITDA margin going forward?
Thank you, Sachin, very good question. So let me take the subscriber numbers question first and then maybe I'll hand over to Akshaya for the synergies and EBITDA part of it. So on subscriber numbers, yes, most of it is coming in from the INR 35 or the minimum recharge voucher implementations we've done. On this, I guess the biggest chunk, more than 80%, 85% of these customers are coming from ARPU banks below INR 25. A bigger half, more than half of that is coming from people who were 0 users or incoming-only. Now therefore, the average revenues of customers that are exiting on this proposition are in low single digits. So yes, it is because of this sort of customers. When will it stabilize, Sachin? I would see it, it will take maybe around this quarter, end of this quarter, maybe a little bit into the following quarter. Let's see how it unfolds. But that's also because the implementation was done in phases. And in fact, for some set of customers, the implementation is still happening, some due to regulatory requirements and some otherwise. So therefore, you will see a little bit of a tail of it probably following in a little later. But most of it should probably be completed in this quarter.
Sorry, Balesh, one small follow-up here. If 80% to 85% of the subscribers really are low-ARPU, below INR 20 kind of a customer, once they are removed, why is the ARPU only improved by INR 1? So is that a noncustomer ARPU, like interconnect and others, which is going down, which is having an impact? Or anything else which is playing out here?
So Sachin, let me address that. Because, you see, the -- probably, the denominator of number of subscribers which goes into the ARPU calculation is not entirely known to the external because it is an average of 3 months. And if we have seen a certain reduction in number of subscribers, only half of that is reflecting in the ARPU calculation. So it is not that the reduction of 35 million subscribers is fully reflecting in the ARPU impact. And I think this will reflect, going forward, from our point of view, the most important thing is that we have seen, on an exit basis, an improvement in revenue despite a decline in the number of subscribers, and which is a positive news.
So Akshaya, can I actually put it the other way around, possibly, to give the pro forma ARPU numbers, or even an exit ARPU, just the way as Bharti had given for December?
I think we will not be able to give it to you right away, but you can take it off-line and we'll be able to share that number.
Okay, got it.
On the second...
So on that, you had 2 more questions. One was on synergy and second is what is the net interconnect. So let me answer the last question first. The net interconnect figure is roughly INR 4.6 billion for the quarter for us. On the synergy, could you repeat your question as to what exactly do you want to know?
Yes. So Akshaya, you did mention that in this quarter, a lot of the ARPU -- or margin improvement was predominantly on the back of cost savings. So just wanted to understand, how much of that is the synergy which is driven because of the integration? And basically, I'm trying to figure out how much more room for margin improvement is there going forward, led by synergies?
So Sachin, let me explain like this. I think if you say what is on account of merger, sometimes, it is difficult to kind of say what is on account of merger and what is not on account of merger. So if you will see that at the time of merger announcement, we have kind of used the definition of synergies. When we made the analyst and investor presentation in the month of November, we had said that this is the cost reduction we will achieve, whether you call it cost reduction or synergies from the current base. Now that figure, we had given a guidance of INR 84 billion. The entire cost reduction which I have indicated to you, and right now, because we don't want to get into the process of normalization, we've just simply compared to Q1 versus Q3 because Q1 did not have any merger impact. And that reduction is INR 30 billion quarter-on-quarter, which can be compared with the overall target of INR 84 billion, which we have given to be achieved in FY '21. So does that...
_Had question -- annualize...
Yes, INR 30 billion is the annualized. Quarterly, it is INR 7.5 billion.
Yes, it does answer. And sorry, one last question. This net interconnect of INR 4.6 billion roughly implies 40% of your -- this quarter's EBITDA. It's on a relative basis, for example, as 2020, this entire amount is going to hit INR 20 billion. So you see an EBITDA improvement on the back of synergies going forward to sort of completely offset this INR 4.6 billion impact?
Yes. We expect that to happen. Also, I think as we have seen this trend is declining quarter-on-quarter because of the change in mix of minutes.
The next question it from the line of Pranav Kshatriya from Edelweiss.
My first question is regarding the traction in the data usage. If you look at the data volume growth for the peers, it's significantly higher, whereas Vodafone Idea is below that. Is it because of network integration and related issues impacting the volume? Or is it more of a sales issue that you have not been able to push that so significantly?
Thanks, Pranav, good question. And thank you also for putting it in your analyst notes, so we have the questions already from you. So on a serious note, traction in data volume. So in itself, our data volume has grown by 11%, which is good. In itself, our 4G has grown from -- by 9.5 million customers, which is good. But in comparative terms, you find us lesser, and that's primarily because of all the integration stuff that I am talking about still has to bear fruits. For example, of the 8 service areas of integration, of consolidation of network that I talked about, have all happened pretty much in the last week of January. In December, we only had [ ROB for investment also good ], which is integrated. So we need to still wait to see the benefits of incremental uptake of -- on subscriber base and see in data user and also in their usage because of enhanced capacities and more customers coming, therefore, on the unlimited side. So we see that, therefore, the opportunity is actually opening up and becoming much, much larger. As I already shared, the Vodafone brand, for instance, growing from 40% to 62% of covered population, opens up a huge opportunity for us now to take up even larger numbers of 4G from our existing base or from new customers coming in.
So do you expect, going forward, you will accelerate your 4G sub addition or -- I mean, because that is where the numbers are clearly lacking? And as the network quality increase, can you see it, even the volume growth, to accelerate further from the current level?
Most certainly, yes. With so much more with the covered population coming in and so much more capacity coming in, we should be able to extract a bigger share of the 4G market.
The next question is from the line of Manish Adukia from Goldman Sachs.
Two questions from my end. You alluded that you saw an increase in month-on-month daily revenues in the month of December and also in January. Can you talk a bit more about it in terms of what is the magnitude of increase that you are seeing? And how sustainable is this growth, without any change in tariff, do you see this growth trend continuing? Second question is on your balance sheet, if you can give us an update on the deleveraging initiatives and what are the time lines you're looking at for the right issue, fiber sale and the tower sale?
Thank you, Manish. So on the first question, about revenue increases we have seen. Very clear green shoots or even leaves coming in there now. So we therefore have chosen to share already that the monthly run rate in December is better than November, and January versus December. We will not be able to quantify that at this stage, but we very optimistically assume those numbers. Is this sustainable or can we expect this to continue? This initiative itself is obviously not going to continue to lead to more and more increase in revenue because the table goes up once and then stays there. However, with everything else that we are doing, as I had talked about already, which is coverage improvement and capacity enhancement, we look at, for sure, opportunities for keeping revenue going up.
And on the balance sheet, you asked about the time lines for monetization initiatives. So I think as far as the Indus merger is concerned, that is -- or the monetization is linked to the completion of Indus merger with Bharti Infratel. As we mentioned earlier, that we are expecting this to be completed in early Q1 FY '20. And so as soon as the completion happens, we have the option to monetize this asset. As far as the rights issues is concerned, as you know, the Board of Directors had approved the rights issue on 23rd of January. We have been working on the various processes to be completed to be able to launch the rights issue. And our expectation is that this will be completed in the coming quarter, more likely in the early part of the coming quarter. On the fiber divestment, as we have been saying, we have been working on this. This is a significantly distributed asset, so I think over the last 1, 1.5 months, we have collected all data of the fiber assets across the country. For both the erstwhile entities, we are more or less ready to initiate the process, along with our bankers, to approach investors and take the process forward.
That's helpful, Akshaya and Balesh. I just had one more question. In terms of your network capacity and the spectrum bands, you obviously have a significant chunk of the 2500 megahertz band. Have you already started deploying network in a meaningful way on that particular band? If you can just comment on that.
Yes, for sure. We have been using the 2500 TDD band for creating capacity as and where needed. So the multiple circles and pretty much everywhere in the company, we have got the 2500 spectrum. And in multiple countries, we -- sorry, circles, we have started lighting up the spectrum. I don't have the exact numbers to share with you right now on the TDD sites, but this is capacity- or demand-based, and we increasing the capacity as and when required.
Just to add to that, Manish, I think we have given you guidance for -- in our investor presentation in terms of the extent of capacity increase that we are looking at. And a large part of that is going to come, one, by consolidation of spectrum; and second is by deployment of TDD on our sites. So the utilization of 2500 band is an integral part of our capacity increase as well.
The next question is from the line of Srini Rao from Deutsche Bank.
Two -- three questions. First, if you can throw some light on the distributed integration, which Balesh kind of indicated in the comments. Do you see any potential RMS impact on account of the integration? And how have you thought about going about on that? Second, on the 8 circles, I mean, it looks like developed circles where at least one of the brands were the laggard. So should we expect, as we have seen in some other markets, the network which is weaker tends to get a pretty big leg up? So do you expect some sort of a market share gain, so the weaker brand on those 8, 9 circles? That's the second one. And third, you have indicated a 2.5x increase in data capacity from the current levels. That actually would still be lower than what is your current data throughput, as reported. So would you still think that the potential capacity gain which you intend to achieve will continue to make you -- remain competitive in the market? These are the two questions from my side.
Thank you, Srini. All great questions. So talk of the first one, distribution and integration. Now Srini, we've spent 17 long months planning every bit of the integration, including data distribution and thinking through therefore in the whole process, the mapping. We've gone in the first 3 months identifying and selecting the best distributors. We now therefore have, between the 2 brands, chosen the strongest distributor in each territory. Already, in most cases, the distributors have started billing for both the brands across all retailers that existed for both the brands. The service and beat at the market of the frequency of beats is as good or higher than before. We have more stronger distributors than before because we've gone through the process of selection and elimination. Therefore, to your question of do I see an RMS impact, way forward I see a positive RMS impact coming through a stronger distribution network than otherwise. Second question was 8 circles. Yes, 8 circles integration, as you well noticed, if we had gone through -- not in all cases but are in most cases, these -- the networks where one of the brands was not as strong, and therefore the traffic of the brand was lesser, and therefore the complexity of being able to integrate was lesser. And therefore, we could quickly move on. Now already in these 8 opportunities for a stronger -- for the lesser of the 2 brands to grow stronger, yes, is very high. But not only. This consolidation also leads to spectrum consolidation, which means capacity creation and hence CXX improvement. And therefore the opportunity for the larger brand to grow even larger is also there. So a simple answer, yes, I see a market share opportunity -- gain opportunity in case of these markets comes both from the market share of the weaker as well as the market share of the stronger brand. Third question was of 2, 2.5x the capacity and versus competition. Is it enough? Or is it -- will it be -- make us competitive enough? Srini, we are very cognizant of this subject, and therefore, in our strategy that we've already talked to all of you about and I repeated today in the video of the call, we are going very focused in where we are creating this capacity. Coverage, I create practically everywhere by using -- by retaining the larger of the 2 networks and only taking cost out in the districts of C and D quads. But in A and B quads, which is where our biggest revenue, therefore, traffic, therefore also the future -- monetization opportunities are is where we are investing heavily into capacitization, which means a big chunk of the capacity creation that happens, happens there. Is that's where my 140% of my EBITDA and largest chunk of my revenue at 93%, if I recall it correctly now is. Then I am creating complete -- as much capacity as is required when I grade CXX in the areas, which really are giving the details. And therefore will remain very, very competitive there. In the others, we are not exiting the coverage and therefore access to technology only improves for the lesser of the 2 brands and, therefore, competitiveness even in those markets improves. However, the capacity creation there will only be demand based in over the period of time, I mean to my -- will be slightly true for me.
And Srini, if I may add, I think there is some difference in the business model and if you look at currently with our current capacity, we have roughly 100 million broadband subscribers. As we grow our capacity from 2.5x, some of that capacity will be taken up by the existing subscribers using more within the same, let's say, ARPU level, but a large part of it will enable us to us to get more subscribers on the unlimited plans, on the broadband network and that is the one which will, kind of, generate additional revenue. So we definitely believe that this capacity that we are creating, creates a great opportunity for increasing our revenues.
[Operator Instructions] The next question is from the line of Sanjay Chawla from JM Financial.
I've got 2 questions. First one is on the impact of the minimum ARPU plans that you launched last quarter. You have reported a 35.1 million net subscriber reduction. So what is the corresponding reduction in the number of smartphone devices on your network, which corresponds to this subscriber reduction of 35.1 million?
Is there another question? Or Sanjay, should I start?
Sorry, related question to this is you've reported 9.5 million 4G subscriber additions in the data user additions this quarter. So how many of them are result of some of the customers being compelled to do a minimum recharge for service validity to retain the connection? That's the first question. And second question is on network OpEx, which seems to be still on the higher side, I mean, if I just look at your nearly INR 57 billion network OpEx this quarter on a per site -- per unique site basis, this is INR 94,000 per site, per month. So what explains this high level of OpEx per site? And on a normalized level -- normalized basis, what should it be like once you've extracted all the synergies assume let say there is a 1 full tenancy and that 2 loadings on each unique site?
Sanjay, let me take the first one -- first question and then maybe Akshaya can take up the network OpEx, [indiscernible] side. So on the first question, which is the minimum ARPU plans and the impact of that. Your question was of the 35 million that we've lost -- that we've lost many smartphone or how many smartphone phones from the network. Phones from the network -- smartphones from the network continue to grow in line with the growth earlier. And we do not see any impact of -- so exodus is not of those customers that have left us, it is not softer smartphone users. On the contrary, when you say the 9.5 million in the next part of the same question you see that the 4G users on the base is only increasing. So therefore, that is very clearly the low ARPU, marginal and users is the minimal revenue if at all that has gone out. Also, I forgot to say last when I was commenting upon a very similar question, in the beginning was, we also have to remember that a lot of our -- there are now practically on the very few brands in the marketplace and 2 of them are in the Vodafone Ideas table. When I report 35 million subscribers going out, many of these could actually be consolidating their usage within my 2 brands. So they haven't left Vodafone Idea Limited, but they have left Idea Vodafone to go to Idea, are consolidating their usage in Idea or vice versa. So we need to keep also that factor in mind while comparing or while pulling these numbers in your mind, so the -- just to get a perspective on that. Akshaya, you want the floor.
Yes. So Sanjay, actually on the network cost, let me make a few comments. First is that I think, at this point of time, the cost per site calculation will give somewhat misleading results because while we have saved on the rental on all the colocated sites, but the energy cost on the colocated sites will start reducing only once the equipment is removed. Last quarter, we had given you a guidance that the saving on account of rentals on colocated sites is off the order of about INR 1.5 billion per month and that benefit over 3 months of INR 4.5 billion over the quarter has been realized. However, if you have to use a number of sites, it is at 200,000 roughly number of sites does not reflect because the energy cost is currently not reducing on the colocated site. That is point number one. Also, if you are trying to compare the cost per site of -- before the merger for Idea as we have reported and now there are some differences in the operating models, the Vodafone model was more outsourced and those costs are reflected in network cost. In case of Idea, it was more in-house, and so those costs were reflecting in manpower costs. So that is not entirely comparable. Also, the last point there is that as far as the energy costs are concerned, we are in a process of migration from fixed energy models to pass-through model in this period. As a result of which, somewhat the billing process is a little happening with a lag of type. And also, wherever we have actually switched off the sites to assess as to what is the extent of cost reduction on the actualization will take some time. So most of the energy cost provisions currently are happening based on historical costs, then the actualization happens based on the latest billing. So the benefits of energy cost will start reflecting a little later, even the somewhat energy savings, which may have been achieved in this quarter, they are not fully reflected because of the fact that the actualization will happen in the future.
Akshaya, a related question to this. Again, thank you so much in explaining this point on the energy cost site. But you also deloaded -- physically removed 21,000 in all sites around, which were there. So did we not see any impact of this removal with regard to the energy cost reduction?
You see, these are mostly back ended towards the end of the quarter. And so that benefit, as far as the rental is concerned, maybe some of it is reflecting in December. In this quarter, we will see a full quarter benefit. As far as the energy is concerned as I said -- it is not reflecting in any benefit right now because of it is not possible to assist as to what should be the reduction. Probably, in the current quarter results, we'll have better clarity on the energy costs.
If I could just do a follow-up on the first part which I asked about the impact of minimum ARPU plan. So basically what I'm trying to understand is you've reported 9.5 million 4G data, is there additions? Could it also be a result of partly -- result of the fact that maybe there were some dominant users, using Vodafone Idea as a secondary SIM card and having primary 4G slot being used with another SIM card? But this minimum ARPU or minimum recharge is, kind of, compelling these customers to do a recharge and they also start using a bit of data and then they get recognized on your network as a 4G data user and add to this 9.5 million number. So this is what I'm trying to understand. Is there any impact of the actions on account of minimum ARPU plan on the 4G customer addition that you reported?
I think Sanjay, what is to be noted there is that the 4G data usage per sub is also going up slight, I mean, there would always be some cases where somebody who was not using as comment to the minimum recharge than he's gotten added. So really speaking, that could happen, but that is not anything of significance. Really speaking, the 4G subs have genuinely increased and the consumption, as I said, third way of 4G sub is going up.
Sanjay, a related thing while Akshaya clarified the OpEx part of it, but reading some analysis this morning and the impact of this on CapEx also has to be understood. Increasingly, you will have to view my CapEx investments very differently. Why do I say that? Because my CapEx as I've already shared in the analyst meet, by number of sites that are already -- so there are equipment I already have on 4G FDD, which is the coverage layer of 4G, is kind of already enough to create a nationwide coverage of 4G for me. Which mean my enhancement of 4G coverage is all going to come from CapEx already deployed, reusable, which means it will not reflect in new CapEx, not in the number of sites going up in terms of 4G per se. All of the real sites that are beaming for either of the 2 networks is constantly going up. So for example, while we said 11,000 4G sites in of which -- so many TDD and then, therefore, there was a backward calculation by someone to say, 2,700 4G sites. That many sites? That's correct. However, that's what we've done through new equipment purchase in CapEx. So when I talk of going up to 62% coverage for Vodafone brand with 60% of something for the Idea brand, that comes by being able to fire 4G for both, or through ICR share for both. So for instance, Vodafone brand at the time of day 0 was beaming 4G from 85,000 sites. End of last month, we are -- sorry, end of December, we were beaming for Vodafone's 4G through 114,000 sites, which means another 29,000 sites not 2,700 sites for Vodafone brand. The Idea brand has gone from about 80,000 to about 104,000, so 24,000 more sites. So CapEx and the new site rollout, the level we seen in that perspective. What we really have to see for this new company is very clearly the opportunity I have in terms of reuse, I have in terms of redeploying the existing equipment on ground and therefore, it will reflect more and more. And this source-energy hypothesis on which the whole merger is based. So this will mean a much larger return on the CapEx being invested and which will reflect in increased coverage and increased capacity, despite number of sites not showing up.
The next question is from the line of Kunal Vora from BNP Paribas.
There are 2 questions. First, is you mentioned that in December and Jan, you have experienced some revenue increase, but also what we see is some aggressive plans were launched in last few weeks, which include the 1499 annual plan, which now is 1699, also recently 119 for 28 days 1GB plan. So what's the thought process? Because these plans seems to be cheaper compared to the competition as well as might be ARPU dilutive. And also we could see some declines in postpaid ARPUs to continue. In that context, should we expect the revenue month-on-month improvement big progression to continue? Or these could like play breaks? That's first question. Second question on the integration which you completed in 8 circles. Can you share the experience how is it been? Did you see any disruptions -- service disruption or loss of customers in those circles? Yes, and when do you expect to complete it in all the 22 circles?
Can I start with second one first?
Sure.
The 8 circles service areas plus -- as we are going cluster by cluster in various parts of other circles as well. Everywhere, where we consolidate, we've got great learnings from earlier consolidations are soft exercising of our. We go well planned. We go cluster by cluster. We create capacities first. So make before you break. So we create capacity first on network A, before shutting down network B. Tried and tested principles, patiently being executed. And therefore, the customer impacts have been minimal, and very short-lived, on the downside of it. On the upside of it, the customer impact because of increased capacity in coverage has been much -- is obviously forever to keep because you've created the capacity and you created coverage enhancement for 1 of the 2 brands for a long time. And therefore, there we are seeing very good improvements in terms of capacities, this reflected in the kind of speed that we are being able to offer to the customers there. So clear positive impact is what we are seeing. We have learnings every day as we go along this exercise and this is -- in reality, anywhere in the world, this kind of an exercise would have taken very long time. We are saying, we going to do it in 18 months, which is by June '20, we should be done with it everywhere. And this will be in stages every passing day you would see more and more improvement to the customer account. But we are doing it first that while we move with very good speeds, very quickly and rapidly, we do not do it such that the customers have -- feel the pain of the network integration.
Sure. That's very clear. And the first question.?
And on the first question, I am handing over to Akshaya.
So Kunal, actually the plans, which you've talked about, they are meant for very specific customers who have that specific requirement, it is meant to address their needs, the offtake of these plans is very low. And so it is not going to have any noticeable impact on us.
Sure, sure, sure. Okay. So like should we expect the positive momentum? Do we expect the positive momentum to continue month-on-month? Any indications?
While we don't give, Kunal, short-term guidances as you know. We've got all the reasons to believe that we talked about 4G coverage, we talked about capacity, we talked about, therefore, opportunity to gain market share in those areas both on 4G and on overall. We talked of 2G footprint for the 2 brands increasing. Therefore, we are very optimistically looking at growing share and growing revenue from the subscribers that existed.
Great. Just one last question, if I can. The 9000 TDD B stations which you added during the quarter like most of these will be on 2500 megahertz spectrum. And is that the case? And how many 4G devices support 2500 band? And what are you trying to do to increase the same?
So very good question, Kunal, again. Yes, most of it will be in 2500 because we have 2300 only in I think in 2 circles, we have 2500 in most. But we have sufficient spectrum of 2500. In the areas where we have capacity required, which is basically the metros, the penetration of band 41, which is the one that supports 2500, and this is running between 45% to 50% depending on where we are talking about and growing because increasingly most of the smartphones that are coming in are coming with the band 41 capability in there. Now again, this is a capacity layer and therefore, already with a 45%, 50% kind of numbers that I talked about is more than enough for me to offload a big chunk of my traffic in these geographies onto 2500, therefore, decongest my next layers of 4G. And that's then therefore has CXX improvement for both the band 41 guys and also those who do not have the band 41. What we're trying to do is obviously, work with antenna vendors to ensure more and more devices come in with band 41.
In fact, Kunal, wherever we've rolled out this on many sites, we think that the traffic on this band has already half than base coverage band of 1800. So I think the handset penetration is not going to be any limitation because basically as this is not the base layer, this is half of your customers have this compatible landslip, they would generally be higher consumers, higher usage consumers. And so I don't think the handset penetration is a matter of...
Any longer. It was a year ago, but it's been building up very, very quickly. So no longer it's an issue.
The next question is from the line of G. V. Giri from IIFL.
I have 3 questions. One is on Jio Phone. Do you have -- is that a worry for you that a product like the Jio Phone, which is a band G, available at only $500 and promises 4G, is beginning to increase penetration and distribution spread? And your customer base has a substantial rule proportion also. So what would be your strategy to defend yourselves against this? That's question number one. Question number two, is that you just mentioned that in this quarter, Idea's 4G base stations went up from 80,000 to 104,000 and for Vodafone went up from 84,000 to 114,000. So all that you've done with only INR 1,100 crores CapEx in the quarter, this quarter? And the third question is that you've given your broadband a unique location count as 157,000. So I would assume that because your earlier 3G base stations are also 4G upgradable, quite a number of them, and in recent times you must have been putting more of 4G. That this 157,000 is quite substantially 4G. In which case, it seems to me that even before you've started your INR 33,000 crore CapEx, you've already done quite a lot. So why do you have such high CapEx? Is it -- can you give some color on why you need to spend that much because one of your competitors, Bharti, is already talking about bringing their CapEx down, and they don't have too many more 4G locations than you or 4G customers than you. So why would you need to do so much more? Is it to do with a mix of CapEx? Or fiber? Or what is the need for you to do that much CapEx if you've already covered so much ground?
So let's start with the first one, first then, because these are very varied questions, so let's just go right through them. First one, Jio Phone. Now we do not plan to get into phone subsidy game at all. We are -- we have seen that the Jio Phone traction, overall, has started going down. But again, what -- we -- our strategy to counter this is, I would say, 4 fronts or 4 plans. The first one -- it's first of all to create the 4G coverage and capacity. Right now, as you rightly said, a big chunk of their offtake is happening from rural areas, where I may not even have my 4G coverages now. So therefore if my customers want to go to smartphone, I am not even under considerations yet. Second, we've broken the set of customers that are going into those devices into 3 kinds. First, set of people go there for wants of a device. They want a cheap device. And for that, what we're doing is working with the 2G feature phone vendors to bundle feature phones at lower price as low effective price as possible to be able to be giving them a great option to go to get a new phone if they need one. Second set of people are going there because they needed a tariff. And that's where you rightly or somebody rightly pointed out a new tariff for 1-year validity and a tariff of 6 months validity et cetera. Now as those tariff plans typically advance so that people don't have to go buying handsets because they want a particular tariff. So we have competitive of similar tariffs to make sure that. Third set of people go there because they want infotainment. They want entertainment. They want video. They want TV. And for this set of people, our strategy is to go, work with the handset vendors for creating newer and newer levels of effective price for full-blown smartphones and therefore, give a much better experience to those customers at a price slightly higher. We are working with those strategies to be able to counter video handsets. Moving on to the second question of CapEx of only INR 1,100, but having done this. That is very clearly and I said the status of the merger, which is being able to utilize the investments made by 1 brand on to creating coverage and capacity together. And that's beginning to bear fruits, as I already said earlier, we will, therefore, need minimal investment into CapEx, in the coverage layer. We will be able to reuse the equipment from 1 of the 2 brands to create coverage for the other one. Akshaya, you want to say for the other one?
Yes, on the -- where will the most of the investments go, as we said the coverage layer is largely provided for. But we also said that we're planning to get that capacity to 2.5x by March '20. And this would require investments in TDD, investments in Massive MIMO, investments in small cells. We will need to make investments in fiber and transport, whatever is required to supplement these sites. And also, I think, in the end still we also want to migrate some 900 megahertz to LTE to provide better in-wall coverage and better penetration to kind of for it is quite important from a voltage perspective in the long run. So -- and as we have merged and we have got more 900 spectrum that is required for GSM, we have a good opportunity to do that without the need for additionals of 1 gigahertz spectrum. So I think those are the things which will take up the investment. But the basic coverage layer is done on a very minimal investment.
Next question is from the line of Viju George from JPMorgan.
Just wanted to understand anecdotally whenever -- when a subscriber migrate to 4G, upgrade to 4G, what is typically the kind of ARPU improvement either in absolute terms or percentage terms that you observe on the network?
So good question, Viju. That is very interesting and that is why we are all chasing, getting more and more customers to come to 4G and ultimately to unlimited 4G. And therefore, very, very simplistically put, ARPU of a unlimited data user is about 4x that of those who have got non-unlimited products. Now again, I am oversimplifying because it is not that those who have non-unlimited, do not use data, especially with the new bundles that we've launched where there is some amount of data in there as well. But most people with the 4G handsets are going for the unlimited data proposition. And therefore, the ARPU is 4x more. Now this is averages versus averages, there could be a customer who was sitting on the higher end, but still is able to be a good 35% to 40% increase to my mind when one moves from non-4G to 4G.
I mean, one way to look at it and another way is that if you are at a minimum recharge level with a plan of INR 35 and with the normal unlimited plan is about INR 199, that delta adjusted for GST differential is another way to look at us to what is the potential for ARPU improvement from a minimum recharge value to an unlimited plan value.
Sure, sure. The other question I had was, are you establishing a brand? I mean, I didn't quite get the comment in at the early part of the call. Did you say that in some of the circles or some of the districts where one particular operator is not strong, you're extinguishing that brand altogether?
No, Viju. That's not we have planned. On the contrary, we are strengthening the brand that is weaker by being able to provide coverage and capacity to that brand as well. Next earning, we are planning to keep both the brands per the earning in the marketplace because these are brands very complementary in nature. In areas where 1 of the 2 brands is weaker, typically, it is because we did not have coverage of 2G, 3G, 4G or all for that particular brand. And therefore, now that you get riding on the other brand's network, 2G, possibly 3G and partial 4G coverage there, the opportunity to strengthen that brand is more -- is even higher.
Sure, sure. And again one last question on this minimum ARPU recharge plans. So that's, obviously, going to reflect in your ARPU improvement as well. I think you said you had probably a much better exit than your overall ARPU for the quarter indicates. So how long will this process go on? Will this go on for 1 more quarter? Or do you think this can happen for a few more quarters, because I wonder if it is being rolled nationwide as we speak?
So Viju, as I said in my response to the first question, in the beginning. We see this so that implementation has been in phases. First 8 circles, to implement the -- in fact, the first 1 circle about 8 months ago with Idea brand alone. Then 3 circles then nationally. Again, even while we say nationally there are some segments which still have to be put onto this for regulatory or other reasons. So therefore, there will be some tail of this that we continue for a slightly longer time. But most of it should go up to the end of this quarter and then the base should start stabilizing from there.
The next question is from the line of Rajiv Sharma from SBI Capital Markets.
Just a couple of questions from my side. So I know you just clarified that the branding that when you were explaining your network and 4G upgrade, you are talking about both the brands separately and the progress. So from a 2-year perspective and also from your synergy perspective of INR 84 billion of savings, one should be looking as Vodafone Idea containing as two brands for the next couple of years? Or it should be like somewhere earlier we may see one brand replacing the other?
So Rajiv, as I've said before, the 2 brands are very complementary in nature, very strong, very -- both got very loyal bases. And the current outlook that we have on this is for foreseeable future, we are continuing with both the brands. However, it's a dynamic marketplace, so I have to continuously keep evaluating the market situations and seeing the cost benefit of not certifying the synergies on the brand side against the incremental gains, I guess, but playing 2 brands rather than playing a single brand game again.
Okay. Now coming to -- I know you're not providing any quantitive color on the CapEx, but just trying to understand that one end you definitely mentioned that this quarter, the CapEx was low because vendor contracts were getting formalized. But the other end, you are also talking about various things which are in place, which will limit your CapEx, but what would be that number be on -- for a next year base -- next fiscal year that one should be looking at? Is it fair to assume that your entire EBITDA at least gets invested in CapEx next year?
Well, not link it to EBITDA, but just to repeat we have given a CapEx guidance of INR 270 billion for FY '19 and FY '20 combined together, out of that roughly INR 70 billion has been spent in the first 9 months and the remaining 15 months, we're looking at the CapEx deployment of another INR 200 billion. So that is the extent of CapEx deployment that we are planning going forward.
And 2 small last questions. Firstly, what is the progress in the metro market? So what you've covered in terms of network integration, is the nonmetro markets largely? So what's the progress in the metro markets like Bombay, Delhi, Bangalore, Hyderabad? When can we expect unification of spectrum in network there? And lastly, Akshaya, on the INR 84 billion, you explained very rightly on that compelling first quarter to this quarter, INR 30 billion. So how should one look at that INR 84 billion in FY '20?
So I just wanted to -- yes. Firstly, I think, on the CapEx, let me also make another point that when we give the guidance of INR 270 billion, this is on new deployment. This does not include the capacity, which will be created either by way of reuse of equipment and which we had in our investors' presentation given a guidance that, that equipment is worth about additional INR 62 billion, where no fresh CapEx will be input. So really speaking, our CapEx guidance should be seen in that light. And there is a lot of capacity creation in addition to all this, which will happen because our spectrum is getting consolidated. So whereas a single equipment was only using spectrum of one of the parties earlier, now the same equipment which is capable of handling up to 4 carriers of FDD spectrum, that will be able to actually use much more spectrum and create capacities by just some marginal increasing on the licensing costs. So that was on the CapEx to complete the earlier answer. On the synergy bit, I think, this was INR 84 billion, we are saying INR 30 billion approximately achieved on an annualized basis in this quarter. At this point of time, I will not be able to give you a staggering of how this will happen over the next 15 months, but for the time being, you can assume that it will be more or less equally staggered over the remaining period. But I think the final guidance, we will only be able to give you by the end of next quarter.
Moving to first question of yours, Rajiv, metro markets. I don't bore you with details of it, but when we say consolidation or integration, there are various layers of it and the various types of it. So therefore, the simplest form is, for example, ICR. So the network of Vodafone continues to run in Delhi as it was but you take Idea customers and put them on it by capacitizing the Vodafone networks. You've not consolidated, but you've given an ICR capacity, to Idea customers and then so on. You could be firing spectrum of both those brands onto one network in the areas where there is only brand. So not the full circle but the village where there was one trying and not the other, and the interference issues will not be there if fire spectrum. And then there is rather an integration you're creating capacities of independent networks. So various kinds of integration and various kinds of solutions are being used across the country. Effort is on everywhere, which certifies into increased capacity and coverage for either or both the brands across the country in phase. Coming closer to the metro markets specifically. Here, these are typically loaded networks and thus, therefore, it's going to be complex for us to be able to integrate them without impacting the customer experience and which we are not going to let that happen. Therefore, we will take our time doing this, however. What we do in the meanwhile is capacitizing of those network. So I do not consolidate does not mean my customer experience will not improve. To put capacities through the TDD or the Massive MIMO route in these metro markets first. You create a lot more capacity in back haul, and then when you have created sufficient capacity cluster by cluster, you start doing even in Metro like Mumbai or in Delhi you start some positive NCR first and so on, and start them coming to the main house. But you will see improvements coming into these markets through more and more capacity, a lot of which, which has been ordered in the end of last quarter because we finished our negotiations with the vendor partners for regulations networks only in end of November. The orders have been placed now, would have been delivered but a big lot of it, it's coming in. And therefore, my capacities which I had already reached, as I stated in my opening remarks, we had already reached 2 billion megabits more by end of January. And we are seeing in March -- February and March a lot more of it coming, which comes through the capacitization of the metros route, not through the reuse of equipment and capacity coverage creation. So capacity creation in metro markets is priority, covering the customer experience there, will for sure delay it.
Is there any time lines you can share on 2, say 4 quarters, 8 quarters?
Consolidation of metro markets, okay. There is a whole calendar behind it. Hyderabad should happen much sooner. Bangalore is already done, it is the third largest metro. Other metros, other than Delhi and Bombay, should happen a lot sooner. Delhi and Bombay are circa -- quarter 4 of this -- of the coming fiscal or quarter 1 of the following, which is by June '20. However, again, this means end of that exercise and not the beginning of this exercise, which means a big chunk of Bombay would have already happened before you get into those dates. It's not the -- across circles starting the activity of consolidation anyways. So it phases you will get even in Bombay. But the end of Bombay, the most congested parts of Bombay would probably be either by March of '20 or June of '20.
That's very helpful. There's one last question if I can chip in. What would be the fiberization of your sites? Hence, how much a percentage of your sites would be fiberized, particularly, in metro markets? Any color if you can provide there?
Very good question, Rajiv. And the first color I would want to provide here, I forgot to talk about it, is just like my sites have increased from 84,000 to 114,000 for Vodafone brand by riding on the opportunity of the Idea brand near me. Similarly, also by fiberization are certainly gone up because my fiber networks have been integrated already in the top 153 cities and on the long hauls. Which means there is a single fiber network now and the top 153 cities is about 80%, 85% of the fiber integration is done -- is done already in the top 153 cities. Which means, we've doubled our fiber ops and our number to the networks. And therefore, capacity on traffic is improving very quickly. Our fiber -- fiberization remains thereafter, obviously, a need is ours in terms of as the usage goes up. We look at it. However, with the fiberization currently held and the plans that we have, we are well placed to be able to take all the 4G traffic across that we are creating or/and recharging in the coming years. As we head towards 5G, we will need a lot more fiberization and that is why strategically we're moving fiber assets into the separate company and then we are looking at being able to pace up the fiberization a lot more with more investments coming into fiber networks there. As of now foreseeable future, enough fiberization already on ground thus planned. We, obviously, keep looking for more and more sharing opportunities to get more fiber. But when the 2 brands fiber network being integrated and the advanced microwave technologies that they're using with the single hops typically or single and two hops, the network is robust enough to carry all the 4G traffic against it.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Balesh Sharma for closing comments.
Thank you, Margaret. Thanks, everyone, once again for participating. I really appreciate your valuable time, and I know it is a difficult hour from various parts of geographies that people have probably dialed in. So thank you so much for that. Just as closing, I would want to reiterate that this was the first full quarter for the -- for my new company. First real quarter of execution for the new company because until the last quarter before this, we were only busy planning. We have executed very well to our strategy, ahead of our own expectations on all fronts, whether it is integration of people, integration of infra, integration of offices, integration of sales distribution and retail channels, all online and even more so on the network integration. We see, therefore, great opportunities coming up our way to be able to certify even more exception of 4G and data customers and therefore, revenues way forward. As also more, more synergies coming in and, therefore, improvement on the overall EBITDA front. Thank you so much. Thank you for joining in and see you next quarter.
Thank you. On behalf of Vodafone Idea Limited that concludes this conference. Thank you for joining us, and you may now disconnect your lines.