Vodafone Idea: Vodafone Idea posts Rs 11,643 crore Q4 loss on one-time AGR charge

Vodafone Idea: Vodafone Idea posts Rs 11,643 crore Q4 loss on one-time AGR charge

NEW DELHI : Vodafone Idea posted a loss of Rs 11,643.5 crore for the fiscal fourth quarter, its seventh successive three-month period in the red, hurt by loss of subscribers, high finance costs and a one-time charge related mainly to its statutory dues.

The telco warned of continued threat to its viability unless the Supreme Court allows it to pay the thousands of crores in adjusted gross revenue (AGR) that it owes to the government in instalments, besides being able to renegotiate repayment terms with its lenders.

“We have also classified certain borrowings from ‘non-current’ to ‘current maturities of long term debt’ for not meeting certain covenant clauses under the financial agreements for specified financial ratios as at March 31, 2020. We have exchanged correspondences/been in discussions with these lenders for the next steps/waivers,” the struggling telco said in a statement released just after midnight on Wednesday.

“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 instalments and successful negotiations with lenders…,” the company added.

The Supreme Court is set to hear the AGR case in the third week of July when it is expected to decide if telcos like Vodafone Idea and Bharti Airtel will be allowed to pay up their AGR dues over several years. The government has proposed that the telcos be allowed upto 20 years to pay up their dues at a reduced interest rate, a suggestion that Vodafone Idea has backed in court.

Vodafone Idea, which posted a loss of Rs 6439 crore in the October-December quarter, after provisioning for the AGR dues, said that as per its calculations, it owes the Department of Telecommunications (DoT) Rs46,000 crore in license fee, spectrum usage charges (SUC), interest and penalties. The government, in its submissions in Parliament, though has estimated dues of over Rs58,250 crore. The telco has paid Rs6,854.4 crore so far.

“…we continue to actively engage with the government seeking a comprehensive relief package for the industry, which faces critical challenges,” Ravinder Takkar, MD of Vodafone Idea, said in the statement.

In the just ended quarter, the telco said that it had further taken one-time charges of Rs 6,140.9 crore, including Rs 1,783.6 crore related to the AGR dues, Rs 248.6 crore related to the merger between Vodafone India and Idea Cellular, Rs 221.1 crore towards additional depreciation/impairment of assets besides Rs 3,887.1 crore towards one-time spectrum dues towards the government.

This, along with high interest and financing costs, weighed on Vodafone Idea’s bottomline in a quarter when its subscriber base fell to 291 million from 304 million in the fiscal third quarter.

But quarterly revenue for Vodafone Idea – formed by the merger Vodafone India and Idea Cellular in August 2018 – rose 6% on quarter to Rs 11754.2 crore, primarily supported by the impact of the tariff hikes, which drove average revenue per user (ARPU) to Rs 121 from Rs 109 in the previous quarter.

“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. 117.5 billion, an increase of 6.0% QoQ,” the telco said.

Bharti Airtel, with a subscriber base of 283.7 million, and Reliance Jio, with over 387.5 million users, clocked ARPUs of Rs 154 and Rs 130.6 respectively, for the fiscal fourth quarter. In that period, Airtel reported a consolidated loss of Rs 5,237 crore, hurt by one-time expenses but its India wireless business reported a robust recovery. Jio posted a profit of Rs 2331 crore.

Tuesday, shares of Vodafone Idea closed 4.5% lower at Rs 10.62 on the BSE. The results were announced after market hours.

The existential crisis faced by the telco due to the SC order of October 2019 – which widened the definition of AGR to include non-core dues and left 15 telcos facing Rs1.69 lakh crore in additional statutory dues – and the Covid outbreak delayed completion of the integration, said analysts.

“As of date, we have completed network integration in 92% of total districts… Due to the continuation of nationwide lockdown, the remaining consolidation is expected to take longer than initially expected,” the telco said.

However, reduction in operating expenses for the quarter, excluding license fees and spectrum usage charges and roaming & access charges, meant that on an annualised basis, the telco had fully realised its target merger opex synergies of Rs 8400 crore.

Data usage per customer for Vodafone Idea rose to 11.5 GB from 10.7 GB in the fiscal third quarter. In comparison, Airtel’s average data usage was 14.6 GB, while Jio’s stood at 11.3 GB.

Net debt stood at Rs 112,520 crore compared with Rs 103,310 crore in the previous quarter.

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