Vodafone Idea Q2 results: Loss narrows to Rs 7,218 crore; plans to raise Rs 25,000 crore

Telecom major Vodafone Idea on Thursday reported saw its losses narrowing to Rs 7,218.2 crore during the second quarter ended September 30, 2020. The company had posted a net loss of Rs 50,921.9 crore in the year ago period and Rs 25,460 crore during June quarter of this fiscal. The debt-laden company said that its board has approved fund raise of up to Rs 25,000 crore through a mix of debt and equity.

The telco's revenue from operations slipped marginally to Rs 10,791 crore from Rs 10,844 crore a year ago. The revenue, however, rose 1.2 per cent sequentially as the economy started reopening after the coronavirus-led lockdown in the June quarter.

The average revenue per user (ARPU) a measure of profitability, improves to Rs 119, up from Rs 114 in the June quarter.

On the operational front, Earnings before Interest, Taxes, Depreciation, and Amortisation (EBITDA) was up 5.9 per cent QoQ at Rs 1,630 crore, (after adjusting for one-off of Rs 300 crore) on account of higher revenue and cost savings, but partially offset by higher subscriber acquisition costs. The EBITDA margin improved to 15.1 per cent vs 14.4 per cent in Q1 FY21.

Also Read: Bharti Airtel Q2 results: Telco posts net loss of Rs 763 crore, revenue jumps 22%

The gross debt (excluding lease liabilities) was Rs 1,15,940 crore, including deferred spectrum payment obligations due to the government of Rs 92,310 crore, as on September 30, 2020. Cash and cash equivalents stood at Rs 1430 crore and net debt stood at Rs 1,14,510 crore (vs Rs 1,15,500 crore in Q1 FY21).

"After successfully achieving targeted merger opex synergies of Rs 8,400 crore, we embarked on a cost optimisation exercise across the company in line with the evolving industry structure and business model. Through this exercise, we plan to achieve Rs 4,000 crore of annualised cost savings over 18 months. As of Q2 FY21, we have already achieved around 25 per cent of the targeted annualised cost savings," it said.

On Supreme Court judgement on AGR dues, the telco said that its ability to continue as going concern is essentially dependent on successful negotiations with lenders and its ability to generate the cash flow that it needs to settle / refinance its liabilities and guarantees as they fall due.The Supreme Court, in its final judgement, allowed telecom operators to make payment in 10 annual installments commencing from April 01, 2021 to March 31, 2031.

The company has made payments of Rs 6,850 crore in three installments up to March 31, 2020 and has made a further payment of Rs 1,000 crore during the quarter. It stated that cumulative amount paid till date exceeds 10 per cent of the total liability and accordingly, it plans to pay the next installment by March 31, 2022.

As on September 30, the company's subscriber base declined to 271.8 million from 279.8 million in Q1FY21. However, the gross additions improved with gradual reopening of retail stores. The subscriber churn increased to 2.6 per cent (vs 2 per cent in Q1 FY21), as the market activity increased during the quarter with lifting up of restrictions.

During the quarter under review, the company launched its new unified brand "Vi" after successful completion its network and IT consolidation. It also launched GIGAnet - an integrated 4G network for its users.

On impact of COVID-19, the telco said that the impact of the pandemic and the subsequent slowdown of economic activities continued during September quarter, but it remained committed to help its customers during these challenging times. "The company witnessed some recovery with partial easing of lockdown at state levels, and gradual resumption of economic activities," it said.

Commenting on Q2 results, Ravinder Takkar, MD & CEO, Vodafone Idea Limited, said, "While we continue to face COVID-19 induced challenges, Q2FY21 showed signs of recovery with a gradual improvement in economic activities. We are executing on our strategy and our cost optimisation exercise has already started to yield incremental savings. We have also initiated a fund raising exercise to support our strategic intent. Further, we continue to interact with the government seeking long term solutions to the critical challenges, which the industry faces."

Ahead of Q2 results, shares of Voda Idea ended 3.46 per cent lower at Rs 8.38, against previous closing price of Rs 8.68, on the Bombay Stock Exchange.