NEW DELHI : Vodafone Idea Ltd’s net loss narrowed marginally in the first quarter of FY20, the company reported on Friday, adding that it benefited from the merger of the two telecom brands and incurred lower operating expenses.

The telecom operator posted net loss of 4,873.9 crore in the June quarter, compared with 4,881.9 crore in the March quarter, 5,004.6 crore in the three months ended December, and 4,973.8 crore in the September 2018 quarter. Revenue fell 4.3% from 11,775 crore in the preceding quarter to 11,269.9 crore in the June quarter. This, Vodafone Idea said, was due to the fall in its tariffs and because of customer churn after the introduction of minimum monthly recharge plans.

Vodafone Idea lags behind the only profitable telco Reliance Jio Infocomm Ltd, which posted revenues of 11,679 crore and net profit of 891 crore in the June quarter. Its other rival, Bharti Airtel, will announce its results on 1 August.

The June quarter results are the third full-quarter results for Vodafone Idea, since the merger of Vodafone India and Idea Cellular on 31 August 2018.

The results reflect the fierce competition in the telecom sector, wherein the operators have been struggling to grow profits after the entry of Reliance Jio in September 2016.

The ensuing brutal tariff war forced operators to match offerings, and led to consolidation among operators. Some, however, have since shut shop, leaving just Bharti Airtel and Vodafone Idea to compete with Jio.

“We are delivering on our stated strategy although the benefits are not yet visible in our topline... We are well on track to deliver our synergy targets by the June quarter next year. We expect these factors to increasingly contribute to our financial performance going forward," Balesh Sharma, chief executive officer, Vodafone Idea, said in a statement.

The net loss came despite the company witnessing higher data consumption on its network, and signing up more 4G subscribers. Data volumes grew 9.3%, sequentially, to 3,222 billion megabytes.

Certainly, Vodafone Idea has reasons to cheer. It added 4.1 million 4G customers, taking the overall base to 84.8 million as of 30 June. However, in comparison, Jio has 331.3 million 4G subscribers.

Vodafone Idea’s earnings before interest, taxes, depreciation and amortization (Ebitda) for the quarter increased from 1,785.3 crore in the March quarter to 3,650 crore in the three months ended June.

The adoption of Ind AS 116 positively benefited its Ebitda, the company said. As a result of this change in accounting standard, lease rentals, which used to be counted as network expenses, will be considered in depreciation cost, thereby bumping up the Ebitda.

In November 2018, the company had launched monthly minimum recharge packs starting at 35 to weed out inactive subscribers. As a result, its customer base declined from 334.1 million in the March quarter to 320 million in the June quarter. This shrinking subscriber base led to an improvement in average revenue per user (Arpu) to 108 in the June quarter, from 104 in the March quarter, 89 in December and 88 in September. Average revenue per user is an operator’s total revenue divided by total subscriber base.

To be sure, Vodafone Idea only counts paying users for Arpu calculation. The company’s gross debt stands at 1.2 trillion.

Vodafone Idea’s shares ended 4.84% lower than the previous close to 9.25 at the BSE on Friday.

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