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Informist, Tuesday, Aug 13, 2024

 

By Apoorva Choubey 

 

MUMBAI – Cash-strapped Vodafone Idea Ltd remained loss-making for the 24th quarter in a row in Apr-Jun as the company continued to lose active subscribers to rivals. However, the loss narrowed compared to previous quarters due to a reduction in finance costs and higher other income. 

 

The telecom services provider reported a consolidated net loss of 64.32 bln rupees for the June quarter, compared with the Street's expectations of a loss of 80.47 bln rupees. The company had reported a consolidated net loss of 76.75 bln rupees during Jan-Mar and 78.40 bln rupees a year ago.

 

Vodafone Idea's consolidated revenue from operations fell 0.9% from a quarter ago to 105.08 bln rupees during Apr-Jun, against the average of analysts' estimate of 105.87 bln rupees. The sales for the June quarter were down 1.4% from a year ago.

 

The main reason for Vodafone Idea reporting losses for the last few years is subscriber losses, as the company has been losing market share ever since Reliance Jio Infocomm disrupted the telecom industry in India with its competitive pricing. The company lost 2.5 mln subscribers during Apr-Jun, taking its total customer base to 210.1 mln as of Jun 30. 

 

During Apr-Jun, active subscribers also saw a decline of 5 mln, compared to the average loss of 4 mln subscribers seen over the last eight quarters, to 188.3 mln. Meanwhile, rivals Reliance Jio Infocomm and Bharti Airtel added 7.9 mln and 2.3 mln subscribers on a net basis during the June quarter.

 

The loss of subscribers during Apr-Jun also weighed on the company's earnings before interest, taxes, depreciation, and amortisation. The reported operating profit for Apr-Jun fell 3% on quarter to 42 bln rupees, while EBITDA margin contracted 90 basis points sequentially to 40%. On a pre-Indian Accounting Standard basis, EBITDA declined 4% sequentially 21 bln rupees while operating margin shrank 60 bps to 20%, brokerage Motilal Oswal Securities said in a note today. 

 

The company's average revenue per user per month, another key metric for the telecom industry, was flat compared to Jan-Mar at 146 rupees. Thus, Vodafone Idea ended the trend of growing ARPU by around 2%, as seen in the last eight quarters, brokerage Motilal Oswal Securities said. Several analysts had expected average revenue per user for the June quarter to improve over 1% sequentially to 148 rupees.

 

The company's total expenditure, including finance costs, was 171.91 bln rupees for the June quarter, compared with 183.03 bln rupees a quarter ago, while the tax outgo was 55 mln rupees, against 87 mln rupees.

 

During Apr-Jun, finance costs were at 55.19 bln rupees, lower than 62.80 bln rupees a quarter ago, while the company's other income rose to 2.56 bln rupees from 325 mln rupees a quarter ago. Vodafone Idea reversed the interest cost of 2.6 bln rupees following the Supreme Court's order regarding the waiver of interest on tax, while it also saw some reversal of accruals related to changes in payment plans, the senior management said in a conference call. 

OUTLOOK

Vodafone Idea will remain committed to ramping up its network and adding more 4G subscribers, while also focussing on scaling digital offerings and services higher to improve profitability. The company has reiterated its guidance of capital expenditure of 500 bln-550 bln rupees over the next three years.

 

For Apr-Jun, capital expenditure increased to 7.6 bln rupees from 5.5 bln rupees in Jan-Mar. Vodafone's capital expenditure remains lower compared to competitors Reliance Jio and Bharti Airtel. It had spent 18.5 bln as capex in the last financial year ended March, compared with spending of 331 bln rupees and 533 bln rupees by Airtel and Jio, respectively. 

 

The company will remain focussed on reducing debt but did not provide concrete details for the same. Its net debt reduced by 114 bln rupees during the June quarter to 1.96 trln rupees, including spectrum and revenue debt to the government, loans and payments to other creditors. Today, shares of the company ended 3.4% lower at 15.47 rupees on the National Stock Exchange.  End

 

Edited by Saji George Titus

 

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