Vodafone Idea registers quarterly net loss of INR255bn

7 Aug 2020

Beleaguered Indian cellco Vodafone Idea has published its financial results for the three months ended 30 June 2020, booking a net loss of INR254.6 billion (USD3.4 billion) for the period, compared to losses of INR116.4 billion in the preceding quarter and INR48.7 billion in the year-ago period. Gross revenue fell to INR106.6 billion from INR112.7 billion a year earlier, whilst EBITDA was up 10.3% year-on-year to INR41.0 billion due in part to a reduction in sales and customer acquisition costs, marketing expenses and cost optimisation initiatives. The company noted that the integration of the operations of its two predecessors – Vodafone India and Idea Cellular – was almost complete and the company is now realising annualised OPEX synergies of INR84 billion. In addition, the cellco has begun further cost optimisation measures ‘in line with the evolving industry structure and business model’ and aims to achieve another INR40 billion of annualised cost savings over the next 18 months.

Vodafone’s bottom line continued to be severely impacted by exceptional items, however, with the cellco recognising a charge of INR194.4 billion during the period under review related to the Supreme Court’s October 2019 ruling on Adjusted Gross Revenue (AGR). Vodafone Idea’s AGR-related dues aggregated to INR582.5 billion up to the end of March 2017, and the company has recognised liability of INR460.0 billion as at 31 March 2020. The Supreme Court is expected to rule later this month on the time frame and mode of recovery for the remaining AGR dues, having rejected calls to allow cellcos to pay the fees over a 20-year period. The company re-iterated its stance on the matter, saying: ‘Our ability to continue as going concern is essentially dependent on a positive outcome with regards to the timeframe for the payment of AGR dues to be made in instalments and successful negotiations with lenders.’ Vodafone Idea’s gross debt – excluding lease liabilities – stood at INR1.19 trillion at the end of June 2020, and included deferred spectrum payment obligations of INR922.7 billion. Reporting on the cellco’s announcement, the Economic Times cited brokerage firm UBS as saying that the operator’s net worth had been eroded to negative INR195 billion.

The cellco recorded a total mobile user base of 279.8 million at 30 June 2020, compared to 320.0 million a year earlier and 291.1 million at end-March 2020. It should be noted, however, that the company has been actively pursuing a strategy of reducing the proportion of low-ARPU users on its network, whilst gross subscriber additions were impacted during the quarter due to the nationwide lockdown. ARPU for the quarter was INR114 and in a similar patter, was down from INR121 in the preceding quarter but up from INR108 a year earlier. Total mobile broadband subscriptions declined for the second consecutive quarter, reaching 116.4 million (104.6 million of which were 4G users) compared to 117.4 million (105.6 million 4G lines) at end-March 2020 and 118.4 million (104.2 million 4G) at end-December 2019. Average data use continued to grow, however, reaching 13.1GB during the three-months to end-June 2020, compared to 11.5GB three months earlier and 9.7GB a year earlier.