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Q3 Loss At Rs 6453 Crore! Viability Under Threat, Says Vodafone Idea

A day before the Supreme Court is slated to hear the telecom operators’ petition seeking staggered payment of adjusted gross revenue dues, Vodafone Idea – which needs to pay the highest and is the weakest financially – said in categorical terms that its viability depends on the positive outcome of its petition.

“It is to be noted that material uncertainty exists that cast significant doubt on the company’s ability to continue as a going concern and its ability to generate the cash flow that it needs to settle, or refinance its liabilities including those relating to the SC AGR judgement and guarantees as they fall due. Our ability to continue as going concern is dependent on positive outcome of the application for modification of the supplementary order before the Supreme Court and subsequent agreement with DoT for the payment in instalments after some moratorium and other reliefs,” the company said in a statement declaring its October-December earnings.

The total dues which Vodafone Idea needs to pay is Rs 53,039 crore. Meanwhile, the company’s losses during the October-December quarter stood at Rs 6,453 crore, wider than Bloomberg consensus estimate of Rs 4,640 crore. The losses are not exactly comparable to the preceding quarter as then the company had posted the highest loss in perhaps the history of corporate India at Rs 50,921.9 crore, on the back of provisions for AGR dues.

Revenue during the period was up 2.26% at Rs 11,089.4 crore – slightly ahead of estimate – on the back of 4G customer additions and improvement in average revenue per user (Arpu). Ebitda was marginally up at Rs 3420.5 crore but below estimate. Ebitda margin declined by 47 basis points to 30.84%.

The company, however, managed to increase its Arpu at Rs 109 compared to Rs 107 in the preceding quarter, on the back of tariff hike in December 2019. The hike though had a limited impact and its full impact would accrue during the January-March quarter. However, the Arpu continued to be lower than competitors Bharti Airtel and Reliance Jio. Airtel’s Arpu for the period was Rs 135 while that of Jio was Rs 128.

“We continue to actively engage with the government seeking relief on the AGR and other matters… at the same time, we remain focused on rapid network integration… after several quarters of pressure on top line, we witnessed consistent revenue turnaround from September onwards,” Ravinder Takkar, MD and CEO of Vodafone Idea, said in a statement.

The company added 8.3 million 4G subscribers during the quarter, taking its overall 4G user base to 104.2 million. Total data volumes grew by 8.5% to 3790 billion MB compared with 3491 billion MB in the preceding quarter. Total minutes on the network declined by 1% during the quarter due to reduction in incoming minutes while outgoing minutes witnessed strong growth, the company added. On all the key operating metrics the company continued to lag behind Bharti Airtel and Reliance Jio.―Financial Express

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