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Vodafone Idea posts Rs 11,643 crore loss in March quarter; AGR charges, subscriber loss hit telco

Our ability to continue as going concern is essentially dependent on a positive outcome of application before the Supreme Court for payment of pending AGR dues in instalments and successful negotiations with lenders, says the company

twitter-logoBusinessToday.In | July 1, 2020 | Updated 09:22 IST
Vodafone Idea posts Rs 11,643 crore loss in March quarter; AGR charges, subscriber loss hit telco
Vodafone Idea's gross debt as of March 31 stood at Rs 1,15,000 crore

Vodafone Idea has reported a loss of Rs 11,643.8 crore in the quarter ending March 2020 against Rs 6,758 crore loss in same quarter of last financial year. In the previous quarter, the telco had reported Rs 6,438.8 crore loss. With this, the telco has reported the 7th consecutive quarterly loss owing to hyper-competition in the telecom space.

The company's revenue for the quarter also remained at Rs 11,750 crore, around 6 per cent rise on QoQ basis. It attributed loss in the quarter to huge loss of subscribers, increase in finance costs and Rs 6,140.9 crore worth of exceptional items.

These one-time exceptional charges include Rs 1,783.6 crore worth AGR dues; Rs 248.6 crore on account of Vodafone India and Idea merger; Rs 221.1 crore towards additional depreciation; and Rs 3,887.1 crore towards one-time spectrum dues.

"After several years of hyper-competition which led to unsustainable pricing, we increased prepaid tariffs at the start of December 2019 across all price points for both unlimited plans as well as combo vouchers. As a result, revenue for the quarter improved to Rs 11,750 crore, an increase of 6.0% QoQ," the company said.

While the net loss for the quarter has widened, the company's topline and operational performance have improved. EBITDA for the quarter increased to Rs 4,380 crore, a QoQ increase of 28.1 per cent driven by higher revenue and incremental synergy realisation. There were one-off credits of Rs 400 crore during the quarter related to manpower and network costs, the company said.

READ: Reliance Jio adds over 60 lakh subscribers in February; Vodafone Idea loses 34 lakh users

The EBITDA margin improved to 18.0% vs 11.6% in Q3FY20. For FY20, the company's revenue and EBITDA were Rs 44,960 crore and Rs 14,910 crore, respectively. The company's gross debt (excluding lease liabilities) as of March 31, 2020, was Rs 1,15,000 crore, including deferred spectrum payment obligations due to the Government of Rs 87,650 crore.

Meanwhile, the telco warned about its viability unless the Supreme Court allows it to pay the pending AGR dues in installments. "It is to be noted that our ability to continue as going concern is essentially dependent on a positive outcome of the application before the Hon'ble Supreme Court for the payment in installments and successful negotiations with lenders. Pending the outcome of the above matters, the financial results have been prepared on a going concern basis," the company stated in its financial results report.

The company continues to actively engage with the Centre to provide relief on various industry-related concerns. Separately, the Telecom Regulatory Authority of India (TRAI) has initiated a consultation on floor pricing at the request of all the operators, through COAI, the company added.

Vodafone Idea is reeling under the loss of customers to rival companies, especially Reliance Jio. The company, already suffering losses, lost 34.67 lakh subscribers in February alone, the latest TRAI data suggests. In terms of market share, Vodafone Idea's share stand at 28 per cent as on February 29, 2020, compared to 32.9 per cent of Jio and 28.35 per cent of Bharti Airtel.

The SC will hear the AGR case in the third week of July to decide if companies including Vodafone Idea and Airtel can pay the pending AGR dues in installments or not. Vodafone Idea has paid Rs 6,854 crore of its dues so far, as against DoT's demand of Rs 58,254 crore. But the company's self-evaluation pegged its dues at Rs 21,533 crore. Simultaneously, Bharti Airtel has paid Rs 18,004 crore so far, whole the DoT's demand of the telco stands at Rs 43,980. The company has self-assessed its dues at Rs 13,004 crore.

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