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Vodafone Idea Q4 results: Net loss widens to Rs 6,985 crore

MUMBAI: ’s (Vi) net loss for the fiscal fourth quarter widened to Rs 6985.1 crore from Rs 4540.8 crore in the previous three-month period, hurt by an exceptional loss, even as the absence of interconnection usage charge (IUC) dragged revenue for the mobile phone operator which again warned of risks to its viability.

Total quarterly revenue for the cash-strapped operator fell to Rs9,607.6 crore from Rs 10,894.1 crore in the October-December period, the company said in a notice to the stock exchanges on Wednesday.

“There exists material uncertainty relating to the company’s ability to continue as a going concern which is dependent on its ability to raise additional funds as required, successful negotiations with lenders on continued support, refinancing of debts, monetisation of certain assets….,” India’s only loss-making private operator said.

Among other risks flagged by the operator was the fate of its plea filed in the Supreme Court to reduce its adjusted gross revenue (AGR) dues from the over Rs58,00 crore demanded by the telecom department, acceptance of its request by the government to defer payment of Rs8,211.7 crore towards spectrum purchases, which falls due on April 9, 2022, and generation of adequate cash flow from operations that it needs to settle/renew its liabilities/guarantees as they fall due.

The telco added that as a result of a rating downgrade, certain lenders had asked for increase of interest rates and additional margin money or security against existing facilities.

“The Group has exchanged correspondences and continues to be in discussion with the lenders for the next steps/waivers,” it said.

The joint venture between UK’s Vodafone Group and India’s diversified Group had announced a Rs25,000-crore fund raising last September via a mix of equity and debt, which hasn’t yet been finalised despite holding talks with various potential investors for several months.

“We are in active discussion with potential investors for fund raising, to achieve our strategic intent,” said Vodafone Idea Managing Director Ravinder Takkar.

The company managed to slow its user losses to 2 million in the just ended quarter, while adding over 4 million 4G subscribers. Vi ended the quarter with 267.8 million subscribers as against rivals Jio and Airtel who have 426.2 million and 340 million, respectively.

It expanded its quarterly earnings before interest, tax, depreciation & amortization (Ebitda) to Rs4401 crore from Rs 4286.2 crore as lower expenses.

In addition, the telco is targeting Rs. 4000 crore of annualized cost savings by the end of this calendar year. “Through several initiatives, we have already achieved around 65% of the targeted annualised savings on a run-rate basis by the end of Q4FY21.”

Ebitda margins expanded to 45.9% from 39.3% in the previous quarter.

Shares of Vi closed at Rs 9.95 down by 1.39% on the BSE on Wednesday.

“The 12% sequential revenue de-growth is a huge concern despite Vi’s decent 4G user adds in the March quarter, which makes it all the more critical for the company to swiftly line up the funding, without which, its survival chances now appear slim, especially as it faces near-term payment obligations upwards of Rs 13,500 crore in FY21 itself,” said an analyst at a leading global brokerage.

The operator’s average revenue per user (ARPU) was Rs 107, lower than Rs 121 clocked in the fiscal third quarter. Rivals Bharti Airtel and Reliance Jio, also impacted by a pause in IUC have posted an ARPU of Rs 145 and Rs Rs 138.2 respectively in January-March quarter.

Vodafone Idea said 9.6% of the revenue drop was on account of abolishment of domestic IUC effective from January 2021 and 2.2% was on account of lower number of days in the quarter. The IUC dip has impacted rivals Reliance Jio Infocomm (Jio) and Bharti Airtel as well.

Net debt at the end of March was Rs 1,79,960 crore, including deferred spectrum payment obligations of Rs. 96,270 crore and AGR liability of Rs 60,960 crore that are due to the Government and debt from banks and financial institutions of Rs. 23,080 crore.

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