Voda Idea Q1 loss widens to Rs 25,460 cr on provision for statutory dues; net worth negative

Vodafone Idea Ltd on Thursday reported widening of net loss to Rs 25,460 crore in the June quarter after it made additional provisioning to pay past statutory dues, and said its ability to continue as going concern hinges on the Supreme Court allowing more time to pay dues.

The nation's third-largest telecom operator had a net loss of Rs 4,874 crore in April-June 2019 and Rs 11,643.5 crore in the preceding March quarter.

It had reported a net loss of Rs 73,878 crore in full 2019-20 fiscal.

VIL's revenue from operations came in at Rs 10,659.3 crore for the first quarter of FY2021, sliding 5.4 per cent from the year-ago period.

The fiscal's first quarter numbers were impacted by nationwide lockdown. VIL said that the availability of recharges due to store closure and ability of customers to recharge on account of economic slowdown were "impacted" during the "challenging quarter".

The gross additions were "severely impacted" by closure of retail stores during the nationwide lockdown resulting in subscriber base falling to 279.8 million in June quarter from 291.1 million in March quarter.

VIL's Q1 Average Revenue Per User (ARPU) - a key metrics for telcos - took a hit and fell to Rs 114 from Rs 121 in the previous sequential quarter, the declines presenting a stark contrast to Reliance Jio and Airtel, both of which recorded ARPU gains during the quarter.

Voda Idea recognised an additional charge of Rs 19,440.5 crore in June quarter towards AGR (Adjusted Gross Revenue) dues.

"...during this quarter, on prudence, we have recognised a charge of Rs 194.4 billion as an exceptional item towards the total estimated AGR liability, in addition to estimated recognised liability of Rs 460.0 billion as on March 31, 2020," a company statement said.

Vodafone Idea faced more than Rs 58,000 crore demand in overall statutory dues, after the Supreme Court last year ordered the non-telecom revenues to be included in calculating statutory liabilities. It has so far paid Rs 7,854 crore towards those dues.

At the last hearing on the matter on July 20, the Supreme Court upheld the demands raised by the Telecom Department but reserved its order on the issue of period over which such payments could be made and terms of payment.

The company said that its ability to continue as going concern is essentially dependent on a positive outcome with regard to the timeframe for the payment of AGR dues to be made in instalments, and successful negotiations with lenders.

"We have also classified Rs 142.8 billion 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," VIL said.

During the quarter, the company received waivers for borrowings amounting to Rs 4,500 crore. Gross debt (excluding lease liabilities) as of June 30, 2020 was Rs 1,18,940 crore, including deferred spectrum payment obligations due to the government of Rs 92,270 crore.

Ravinder Takkar, CEO of Vodafone Idea said, "We continued to make progress on our strategy with integration largely complete, enabling us to realise cost synergies well ahead of our initial targets. We have launched a new cost optimisation initiative that will drive further cost savings. We also continue to actively engage with the government seeking a comprehensive relief package for the industry, which faces critical challenges." The first quarter was a challenging quarter as availability of recharges due to store closure and ability of customers to recharge on account of economic slowdown were impacted, he added.

VIL said June quarter saw strong data volume growth of 10.6 per cent, the highest in the last six quarters, and that data usage per broadband subscriber increased to 13 GB per month.

The company said that integration of erstwhile Vodafone India and Idea Cellular is now "nearly complete" and new cost optimization plan has been rolled out to drive further organisational efficiency. VIL plans to achieve Rs 4,000 crore of annualised cost savings over next 18 months.

The results came in after market hours. Shares of VIL closed at Rs 8.25 on BSE on Thursday, 0.72 per cent lower than the previous close.

VIL's Q1 numbers wrap up the June quarter earnings season for the private telcos' pack.

Reliance Jio, India's youngest but largest telecom firm, last month posted a 183 per cent jump in June quarter net profit at Rs 2,520 crore. Bharti Airtel reported widening of its losses to Rs 15,933 crore for June quarter, after making additional provision for statutory dues.

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