Vodafone Idea on Monday said that it has received a communication from a promoter group entity confirming that in the event of any fund requirement for meeting its impending payment obligations by the company, it shall provide direct or indirect financial support to the extent of Rs 2,000 crore.
The promoter, which is expected to be Aditya Birla group, is likely to help Vodafone Idea meet the impending payment obligations such as the annual installment for 5G spectrum worth Rs 1,680 crore, for which the company has sought a 30 day grace period from the department of telecommunications (DoT).
The telco, which announced its April-June earnings, reported a net loss of Rs 7,840 crore, which is higher than Rs 6,419 crore in the preceding quarter. The losses widened owing to increase in finance cost, which includes interest and charges on borrowings.
Bloomberg had estimated the company’s net loss widening to Rs 7,043 crore. Vodafone Idea’s revenue from operations was largely in line with Bloomberg’s estimate and rose 1.2% QoQ to Rs 10,655.5 crore. Bloomberg had pegged revenues at Rs 10,629 crore.
During the quarter, the company lost 4.5 million mobile subscribers, taking its user base to 221.4 million at the end of June. Vodafone Idea’s blended churn of subscribers rose to 3.9% during the quarter compared to 3.8% in the preceding quarter.
Consolidated Ebitda missed the estimates at Rs 4,157 crore, and fell 1.3% sequentially due to increase in network expenses and customer acquisition cost. Bloomberg had pegged the Ebitda at Rs 4,303 crore. Ebitda margin contracted 100 basis points to 39% from 40% in the preceding quarter.
Owing to weak financial performance during the quarter, high debt levels, muted cash flow position, the auditors of Vodafone Idea continue to flag uncertainty on the company’s ability to continue as a going concern.
“The group’s ability to continue as a going concern is dependent on its ability to raise additional funds as required and successful negotiations with lenders and vendors for continued support and generation of cash flow from its operations that it needs to settle its liabilities as they fall due. Our conclusion is not modified in respect of this matter,” auditor SR Batliboi and Associates said.
At the end of the April-June quarter, Vodafone Idea’s gross debt (excluding lease liabilities and including interest accrued but not due) rose to Rs 2.11 trillion. The gross debt comprises deferred spectrum payment obligations of Rs 1.34 trillion, AGR liabilities of Rs 66,860 crore that are due to the government, debt from banks and financial institutions of Rs 9,500 crore, and optionally convertible debentures amounting to Rs 1,660 crore.
Due to earlier rating downgrades, certain lenders had asked for an increase in interest rates and additional margin money/security against existing facilities, the company said. By June 2024, the company has an obligation to pay debt of Rs 6,826.6 crore. The company said its net working capital (excluding short term borrowing, future leased liabilities, and certain accruals towards pending litigations) stands at negative Rs 21,399.9 crore.
On the operational front, Vodafone Idea’s average revenue per user (Arpu) rose 3% sequentially to Rs 139. The reason for increase in Arpu can be attributed to increase in 4G subscribers as well as data consumption on the network. In the April-June quarter, the company’s 4G subscriber base increased marginally to 122.9 million from 122.6 million in the preceding quarter.
During the quarter, Vodafone Idea continued to lag behind peers Bharti Airtel and Reliance Jio on average data usage per customer. The company’s average data usage per customer was at 15.7 GB, whereas that of Jio was at 24.9 GB, and Airtel was at 21 GB. Growth in Vodafone Idea’s data usage per customer was marginal, compared to 15.45 GB in the preceding quarter. The company’s total data volume rose 3.4% to 6 billion GB.
Similar to peers, Vodafone Idea too witnessed an increase in the minutes of voice usage per customer per month on the network. The company’s minute of usage on the network rose 0.6% sequentially to 627 minutes. The total voice consumption on the network fell 1.2% to 0.42 trillion minutes.
“The eighth consecutive quarter of growth in average daily revenue, Arpu and 4G subscribers, clearly reflects our ability to effectively operate and compete in the market,” said Akshaya Moondra, CEO of the company.
“We remain engaged with our lenders for further debt fund raising as well as with other parties for equity or equity linked fund raising, to make required investments for network expansion, including 5G rollout,” Moondra added.