Vodafone Idea dials a massive Rs 4,973 cr loss in maiden earnings; plans Rs 25,000 cr growth war chest

Mumbai: In its maiden earnings announcement as a joint entity, Vodafone Idea Wednesday reported a consolidated loss of Rs 4,973 crore for the September quarter and announced a fund infusion of Rs 25,000 crore to help it take on the cut-throat competition. The entity, which became the largest telco with 422 million subscribers after the merger on 31 August, reported consolidated revenue of Rs 7,663 crore. Of the Rs 25,000 crore of fresh capital infusion, Vodafone will pump in Rs 11,000 crore into the new company, and the Birla group that owned Idea will infuse Rs 7,250 crore, the company said, indicating that the promoters are ready for a long haul and willing to fight.

The numbers for the reported quarter include results for Idea Cellular up to 30 August, and for Vodafone Idea from 31 August to 30 September and hence these are not comparable, the companies said in a statement.

The “pro-forma” revenue derived without considering the alignment of accounting policies, stood at Rs 12,023 crore, the company said. At Rs 4,973 crore of losses, this is the worst show by any operator in the quarter. The company, however, continued to face difficulties because of competition, which was visible both in a 4.7 percent decline in average revenue per user to Rs 88 (which is the lowest among the private sector telcos) compared to the preceding quarter, and also a 13 percent migration to competition. [caption id=“attachment_4209517” align=“alignleft” width=“380”]  Representational image. Reuters.[/caption] Jio had reported an ARPU of Rs 131.7 (down from Rs 135 y-o-y) and a net profit of Rs 681 crore, while Airtel’s Arpu was massively down to Rs 101 from Rs 142 y-o-y while its net income fell steep 65.7 percent to Rs 118.80 crore. The merger was announced a few months after the entry of the deep-pocketed Reliance Jio, whose aggressive pricing and freebies impacted the financials of all the industry, which has even seen bankruptcies and asset sell-offs. On the capital raising plans, it said, “a committee will be evaluating various options including, but not limited to, a rights issue, qualified institutional placement and/or a preferential share issue. It is currently expected that any capital raising, if approved, is expected to be completed in the March quarter,” it said. Sources said the company has the option to monetise its 11.15 percent stake in Indus Towers which is valued potentially at Rs 5,370 crore. The company also decided to “actively explore” a potential sale of its fibre network, which spans over 1.56 lakh km of both inter-city and intra-city routes. The process of integration is “progressing well” and is on track to deliver synergy targets, the source said, adding the annual synergy prospects stood at Rs 14,000 crore, including operating expenses of Rs 8,400 crore.

“The merger of two large organizations with complementary strengths has opened multiple opportunities to draw synergies across the board,” new chief executive Balesh Sharma said.

The merged entity’s gross debt as of September stood at Rs 1,26,100 crore, while cash and equivalents stood at Rs 13,600 crore. It invested Rs 3,295 crore during the quarter. In the reporting quarter, the overall broadband customer base rose by a net 4.4 million to 99.7 million. The minutes of usage corrected marginally, while the data consumption on the network surged by nearly 20 percent. From a network perspective, it added 24,866 broadband sites (3G+4G) during the quarter, taking the overall broadband sites to 3,65,575.