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Vodafone Idea narrows net loss

14 May 2019

Vodafone Idea, India’s largest cellco by subscribers, has reported gross revenue of INR117.75 billion (USD1.67 billion) for the quarter ended 31 March 2019, a slight increase from INR117.65 billion three months earlier and a pre-merger level of INR61.37 billion at end-March 2018. EBITDA for the period expanded to INR17.85 billion from INR11.37 billion in December 2018, whilst EBITDA margin grew from 9.7% to 15.2% over the same period. This improvement was largely offset by an exceptional impairment cost of INR5.06 billion – compared to a similar expense of just INR350 million in the preceding quarter – leading net loss for the period to narrow to INR48.82 billion from INR50.05 billion.

In operational terms, the cellco’s subscriber base dropped to 334.1 million from 387.2 million at end-December 2018, and 422.3 million in September 2018. The decline was largely by design, however, with Vodafone Idea noting that the introduction of ‘service validity vouchers’ in its Q3 (the period ending 31 December 2018), which require customers to make a minimum recharge of INR0.35 with a 28 day validity, led to the disconnection of more than 50 million low ARPU passive/incoming only customers. Indeed, alongside the increase in turnover, monthly ARPU increased to INR104 from INR89. On the 4G front, the cellco counted a total of 80.7 million subscribers up from 75.3 million three months earlier. Regarding its post-merger network integration and expansion programme, the cellco notes that it added 8,915 TD-LTE sites during the quarter and deployed Massive MIMO to 2,000 key locations. Meanwhile, the company has unified its networks in ten circles: West Bengal, Andhra Pradesh, Haryana, Madhya Pradesh, Himachal Pradesh, Assam, North East, Jammu & Kashmir, Bihar and Punjab. Vodafone Idea also completed India’s largest rights issue during the quarter, raising a total of INR250 billion.

Commenting on the cellco’s performance, CEO Balesh Sharma was quoted as saying: ‘We are pleased with the rapid progress we have made to deliver on our stated strategy. The initiatives we have taken since the merger are yielding positive results and we are well on track to deliver our synergy targets two years early. We remain focused on fortifying our position in key profitable districts by expanding coverage and capacity of our 4G network, targeting higher share of new 4G customers by offering an enhanced network experience, whilst also improving cash flows through cost transformation. The oversubscription of our recent rights issue, the largest in India, is a clear testament to investors’ support for our strategy.’

India, Vi (Vodafone Idea Limited, VIL)

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