Vodafone Idea

Indian telco posts country’s largest corporate loss

03 July 2020 | Melanie Mingas

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Vodafone Idea has posted the highest ever loss recorded by an Indian firm as it faced declining subscriptions and mounting debts in the last financial year.

The telco posted a net loss of Rs. 73,878.1 crore in the fiscal year ending March 2020, compared to full year losses of Rs. 14,603.9 crore in 2019. It has been reported as the largest financial loss posted by an Indian company. 

As of March-end gross debt (excluding lease liabilities) stood at Rs. 1,150.0 billion, including deferred spectrum payment obligations due to the government of Rs. 876.5 billion.

Cash and cash equivalents were Rs. 24.8 billion and net debt stood at Rs. 1,125.2 billion.

Vodafone Idea noted recent losses were due to a decline in subscribers and mounting AGR debts. While analysts maintain the business will need a cash injection to survive, Idea stated that it plans to monetise its 11.15% stake in Indus Towers.

In its Q4 FY20 results, it said the subscriber base declined from 304 million in Q3 to 291 million active subscribers in the last quarter of FY20, while subscriber churn remained stable.

On the AGR issue, the Department of Telecoms (DoT) has proposed a two-decade payment term to allow Vodafone Idea to continue to operate. To date Rs 6,854.4 crore has been paid by Vodafone Idea, however analysts still believe a cash injection will be needed in the mid-term.

Commenting on the most recent quarter, Ravinder Takkar (pictured), MD and CEO of Vodafone Idea Limited, said: “Our focus on rapid network integration, as well as 4G coverage and capacity expansion, has further improved customer experience. We thus continue to lead the league tables on 4G data download speeds across several states, metros and large cities. We have achieved our full opex merger synergy target.

“Despite the nationwide lockdown since March due to Covid-19, our teams across all circles continue to work effectively in these difficult times with support of the local authorities, to ensure seamless connectivity for our customers,” he continued.

“On the AGR matter, the next hearing is scheduled with the Hon’ble SC in the third week of July. Meanwhile, we continue to actively engage with the government seeking a comprehensive relief package for the industry, which faces critical challenges,” Takkar added.

However, not all the news was bad.

Despite some customers being unable to top up their phones due to Covid-19 lockdowns, the firm said there was “no material impact” on its performance due to the pandemic.

Further, over the last quarter revenue increased 6% due to increased tariff prices after “several years of hyper competition which led to unsustainable pricing”. And now the merger of Indus Towers and Bharti Infratel has received FDI approval, the stop date on the original agreement has been extended to 31 August 2020.

Vodafone Idea plans to monetise its 11.15% stake in Indus on completion of the Indus-Infratel merger.