Vodafone Idea posts Rs 50,922 crore loss, India’s biggest quarterly net loss

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Mumbai | Updated: November 15, 2019 6:23 AM

At Rs. 50,922 crore, Vodafone Idea posts country’s biggest quarterly net loss.

VIL’s gross debt as of September 30, 2019, stood at Rs. 1.17 lakh crore, including a deferred spectrum payment obligations due to the government of Rs. 89,170 crore, but excluding lease liabilities (Reuters)

Vodafone Idea posted a net loss of Rs. 50,922 crore for the second quarter ended September, the highest ever net loss reported by a company in India. The company’s performance took a hit on account of an exceptional charge of Rs. 25,680 crore it took during the quarter, on account of the recent Supreme Court ruling on adjusted gross revenue (AGR). The company has made a provision for potential payments that it will have to make to the department of telecommunications (DoT).

VIL accounted for the estimated liability of Rs. 27,610 crore related to licence fee and Rs. 16,540 crore related to spectrum usage charges up to September 30, 2019, including the interest, penalty and interest thereon of Rs. 33,010 crore.

The company said in a statement, “It is to be noted that our ability to continue as a going concern is dependent on obtaining the reliefs from the government and positive outcome of the proposed legal remedy.” Vodafone Plc’s CEO Nick Read had said on Tuesday that the situation in India had reached a critical stage.

Read had added: “If you’re not a going concern, you’re moving into a liquidation scenario — can’t get any clearer than that.”

Vodafone pulling out will send out poor signal on India’s investor-friendliness

The telco along with other incumbent operators was slapped with a massive licence fee and spectrum usage charge of more than Rs. 40,000 crore, after the SC ruled that telecom operators would have to pay their licence fee and spectrum usage charge based on their gross revenue, which would include even revenues from the non-telecom licence business. The total industry dues as a result of it went as high as Rs. 1.33 lakh crore. The Supreme Court has given the companies three months time to pay the dues, however, the government has set up a secretaries panel to see what kind of relief package can be drawn up for the financially stressed telecom operators.

The company further said that through the Cellular Operators Association of India (COAI), it has made representations to the government to provide relief to the telecom sector. The relief sought includes request to not press for the AGR liability payment and grant waivers, not levy SUC on non-licensed revenue/income, reduction of licence fee and SUC rates, use of GST credit for payment of government levies and allow payment to be made in installments after some moratorium and grant a moratorium of two years for the payment of spectrum dues beyond April 1, 2020, up to March 31, 2022.

Ravinder Takkar, MD & CEO, VIL, said “We are in active discussions with the government seeking financial relief following the recent Hon’ble Supreme Court ruling. At the same time, we remain highly focused on rapid network integration and 4G coverage and capacity expansion in our key markets.”

In the June quarter of the current fiscal, the company reported a net loss of Rs. 4,874 crore. VIL had reported a net loss of Rs. 5,004.6 crore at the end of December quarter, and a net loss of about Rs. 4,974 crore a year agor. The telco’s operational metrics in the second quarter continued to deteriorate as customers continued to leave the network. In the September quarter, VIL’s revenue declined 3.8% sequentially to Rs. 10,840 crore, impacted by seasonality and by severe floods in company’s major markets. The company continued to see ARPU (average revenue per user) down trading during the quarter. Ebitda for the quarter decreased 8.3% q-o-q to Rs. 3,350 crore (Rs. 1,050 crore, excluding the Ind AS 116 impact vs Rs. 1,250 crore in Q1) as lower revenue was partially offset by continued cost synergy realisation.

The company’s subscriber base stood at 303 million (VLR basis) versus 322 million in the preceding quarter. In terms of the operating metrics, VIL recorded an Arpu of Rs. 107 versus Rs. 108 in Q1FY20. The company’s total minutes of use on the network during the quarter stood at 6,30,688, while the average minutes per user stood at 669. The total data volumes on the network stood at 3,492 billion MB, while data usage per customer stood at 10,350 MB.

VIL’s gross debt as of September 30, 2019, stood at Rs. 1.17 lask crore, including a deferred spectrum payment obligations due to the government of Rs. 89,170 crore, but excluding lease liabilities. Cash & cash equivalents were Rs. 15,390 crore and net debt Rs. 1.01 lakh crore (versus Rs. 99,260 crore in Q1FY20).

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