Shares of Vodafone Idea declined nearly 4% on Monday after the telecom operator reported its fourth-quarter earnings for FY26, with investors appearing unconvinced by the headline profit figure that was largely driven by a one-off accounting adjustment linked to adjusted gross revenue (AGR) liabilities.

The company posted a consolidated net profit of Rs 51,970 crore for the March quarter, a sharp turnaround from losses seen in previous periods. However, the profit was not driven by core operational improvement. Instead, it reflected the impact of a one-time AGR-related accounting gain, which significantly altered the bottom line for the quarter.

Operationally, the numbers indicated gradual improvement but not enough to fully reassure the market. Revenue from operations rose 3% year-on-year to Rs 11,332 crore, reflecting steady but relatively muted business momentum in an intensely competitive telecom environment. EBITDA increased 4.9% year-on-year, suggesting some gains in operating efficiency and tariff-led monetisation.

One of the more closely tracked indicators, average revenue per user (ARPU), improved 8.3% to Rs 190. The increase signals that industry-wide tariff hikes and premium customer additions are helping telecom operators improve monetisation after years of aggressive pricing pressure. Vodafone Idea also reported growth in its combined 4G and 5G subscriber base, which reached 128.9 million during the quarter.

Despite these improvements, the market reaction suggested that investors are still focused on the company’s broader structural challenges. Vodafone Idea continues to operate in a sector dominated by larger and financially stronger rivals with deeper balance sheets and wider network investments. While ARPU growth is positive, analysts have consistently argued that sustained subscriber gains and stronger revenue expansion are necessary for the company to improve long-term financial stability.

The earnings also come at a time when India’s telecom sector is undergoing another investment-heavy phase with accelerating 5G rollouts, network modernisation, and rising data consumption. Vodafone Idea has been attempting to expand its network capabilities while managing significant debt obligations and fundraising requirements. The company’s operational performance therefore remains under close scrutiny from both equity investors and lenders.