Vodafone Idea Q2 loss narrows to Rs 7,218 cr; sees marginal uptick in ARPU
Vodafone Idea on Thursday reported significant narrowing of losses to about Rs 7,218 crore for the September quarter, and said signs of recovery were visible with gradual improvement in economic activities.
The company’s losses in Q2 FY20 had been at a staggering Rs 50,921.9 crore after it provisioned for Supreme Court mandated statutory dues.
The gross revenue for the quarter ended September 30, 2020 came in at about Rs 10,791 crore, marginally lower than the same period of the previous year.
Revenue was, however, 1.2 per cent higher when compared sequentially, and the company noted that the impact of the nationwide COVID-19 lockdown has gradually started to ease.
Realisation measured in Average Revenue Per User (ARPU) — a key metric for telcom firms — improved to Rs 119 in Q2 FY21 from Rs 114 in the June quarter.
Its Q2 loss at Rs 7,218.2 crore was lower even on a quarter-on-quarter basis.
Total income dipped by about 3 per cent to Rs 10,830.5 crore during the reported quarter from Rs 11,146.4 crore in the corresponding period of 2019-20.
Commenting on the results, Vodafone Idea (VIL) MD and CEO Ravinder Takkar said that while challenges related to COVID-19 continue, the second quarter showed signs of recovery with a gradual improvement in economic activities.
“We are executing on our strategy and our cost optimization exercise has already started to yield incremental savings. We have also initiated a fund raising exercise to support our strategic intent,” he said in a statement.
The company continues to interact with the government seeking “long term solutions” to the critical challenges, which the industry faces, he added.
VIL reported decline in subscriber base to 27.1 crore in Q2 FY21 from 27.9 crore in Q1 FY21.
At the end of the quarter, 4G subscriber base stood at 10.61 crore (against 10.46 crore in the June quarter).
Data volumes declined by 4 per cent sequentially as usage normalised compared to the significantly higher volumes witnessed during the early months of the lockdown.
Gross debt (excluding lease liabilities) on September 30, 2020 was at Rs 1,15,940 crore, including deferred spectrum payment obligations due to the government (about of Rs 92,310 crore).
On the adjusted gross revenue (AGR) issue, the company noted that it has made payment of about Rs 7,850 crore, so far.
“The cumulative amount paid by us till date exceeds 10 per cent of the total liability and accordingly, we believe, the next instalment would be payable only by March 31, 2022,” VIL said.
The company further said it has reclassified the requisite amount to other non-current liabilities, as next instalment payable by it is due by March 31, 2022.
“We have also classified Rs 142.8 billion from ‘non-current’ to ‘current maturities of long term debt’ for not meeting certain covenant clauses under the financial agreements for specified financial ratios as at March 31, 2020. We had exchanged correspondences/been in discussions with these lenders for the next steps/waivers,” it added.
Of this, during the previous quarter, the company got waivers for borrowings of Rs 4,500 crore.
“It is to be noted that our ability to continue as going concern is essentially dependent on successful negotiations with lenders and its ability to generate the cash flow that it needs to settle / refinance its liabilities and guarantees as they fall due,” VIL said, noting that fund raising plans are underway.
On Indus-Bharti Infratel merger, VIL said it will monetise its 11.15 per cent stake in Indus Towers on completion of the said merger.
“The value of VIL’s 11.15 per cent stake equates to a cash consideration of approximately Rs 38 billion (Rs 3,800 crore) currently,” it said.
VIL is the third largest operator in the fiercely-competitive Indian telecom market, where Jio’s entry in 2016 with free calls and cheap data pushed some old rivals to exit, or merge with other operators.
In September this year, Vodafone Idea board approved plans to raise up to Rs 25,000 crore through a mix of equity and debt instruments to keep the company afloat.
The ambitious fund raising plans promised to throw a lifeline to cash-strapped VIL, which has over the past quarters suffered massive losses, has been losing subscribers and faced outstanding statutory dues.
The company recently unveiled a new brand identity ‘Vi’, as the struggling telco looked to rediscover itself post the apex court’s ruling on past statutory dues.
The company faces more than Rs 58,000 crore demand in overall statutory dues, after the Supreme Court last year ordered the non-telecom revenues to be included in calculating statutory liabilities.
The apex court has directed telecom operators to pay 10 per cent of their total AGR-related dues this year, and rest in 10 instalments starting from next fiscal year.
VIL scrip closed at Rs 8.38 a share on Thursday, about 3.46 per cent lower than previous close. The results came after market hours.
The story has been taken from a news agency