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Vodafone Idea Q4 loss narrows to 4,881.9 crore

  • Vodafone Idea posts consolidated loss of 4,881.9 crore in Jan-March quarter; revenue from operations at 11,775 crore
  • Vodafone Idea had incurred a net loss of 5,004.6 crore in the December quarter, compared with 4,973.8 crore in the September quarter

Vodafone Idea Ltd’s consolidated net loss narrowed marginally in the fiscal fourth quarter, as the company realised merger synergies and as revenue stabilised after the introduction of minimum recharge plans.

India’s largest telecom operator by subscribers posted a net loss of 4,881.9 crore in the March quarter. It had incurred a net loss of 5,004.6 crore in the December quarter and 4,973.8 crore in the September quarter.

It beats a Reuters analyst forecast which had pegged the net loss at 4,946 crore.

The company posted a meagre quarter-on-quarter rise in revenue to 11,775 crore in the March quarter from 11,764.8 crore in the preceding quarter. It beat the other two operators on this metric, as revenue from Bharti Airtel Ltd’s India mobile business was 10,632 crore, while Reliance Jio generated 11,106 crore in operating revenue.

The March quarter results are the second full-quarter results for Vodafone Idea, post completion of a merger of Vodafone India and Idea Cellular on 31 August.

The net loss came despite the company witnessing higher data consumption on its network and signing up more 4G subscribers. Total data volumes grew by 9% to 2,947 billion megabytes compared to the last quarter.

The results illustrate the continuing struggle of telecom operators in India to grow profits after the entry of Reliance Jio in September 2016. The heated tariff war, which started with Jio’s cheap data tariffs forcing operators to match offerings, also led to consolidation among operators, some of which have since shut shop, leaving just two other private operators, Bharti Airtel and Vodafone Idea, in the telecom battleground.

However, the tiny silver lining for the struggling telco is the addition of 5.4 million 4G customers during the quarter, taking the overall 4G subscriber base to 80.7 million. In comparison, Jio has 306.7 million 4G subscribers. In the December quarter, Vodafone Idea had added 9.5 million 4G customers.

Total operating expenses for the quarter declined sequentially due to the realisation of merger synergies, the company said. As a result of the synergy realisation, Vodafone Idea’s earnings before interest, taxes, depreciation and amortization (Ebitda) from wireless operations improved 57% quarter-on-quarter to 1,785.3 crore in the March quarter from 1,136.8 crore in the preceding one.

“The company’s EBITDA is better because it has realised synergy benefits. The subscriber base has also shrunk. But despite the losses coming down, it is still behind Jio and Airtel as pricing pressure continues and sector outlook remains weak," a sector analyst said requesting anonymity.

The company had in November launched monthly minimum recharge packs starting 35 to weed out inactive customers. As a result, Vodafone Idea’s customer base fell by 35.1 million in the December quarter to 387.2 million. This has now fallen further by 53.2 million to 334.1 million in the March quarter.

This shrinking subscriber base has led to an improvement in average revenue per user to 104 in the March quarter from 89 in the December quarter and 88 in the September quarter. Despite the improvement, it is lower than Jio’s ARPU for March quarter at 126.2.

The company’s net debt stands at 1.18 trillion.

Vodafone India and Idea Cellular recently also completed a capital raising exercise through a rights issue of 25,000 crore to existing eligible equity shareholders. It is also simultaneously working on monetising its fibre assets apart from its stake in the joint entity of Bharti Infratel and Indus Towers which is close to completing their merger.

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