Vodafone Idea shares in deep red as an uncertain future looms

• Shares of Vodafone Idea opened 10% lower after reports widening of net loss and inability to generate cash flow and raise funds.
• The company has reported a net loss of ₹7,022 crore in March quarter 2021 as against net loss of ₹4,532 crore in December quarter 2020.
• The telecom operator has a piled up net debt of ₹1.7 lakh crore

Shares of Vodafone Idea tanked over 15% at 9:23 a.m on July 1 to ₹8.50, as the Aditya Birla Group-backed telecom operator confessed its struggles to run operations amid its inability to raise funds in its March quarter results.

Shares of the company were trading at ₹9.30, down 6.5% at 10:06 a.m.

The company highlighted its concerns related to the inability to raise funds and clear piled up debt, which questioned their journey forward as a firm.

Vodafone Idea reported a net loss of ₹7,022 crore in the March quarter along with a net debt of ₹1.7 lakh crore.

The company stated that its “financial performance has impacted its ability to generate the cash flow that it needs to settle/refinance its liabilities and guarantees as they fall due, which along with its financial condition is resulting in material uncertainty that casts significant doubt on the Company’s ability to make the payments mentioned therein and continue as a going concern.”

Moreover, the company has witnessed a major decline in average revenue per user (ARPU), which fell to ₹107 in the January-March quarter, a decline of nearly 12% from the preceding quarter.

Analysts had expected the company to report losses narrowing and reduction in average revenue per user (ARPU) considering the end to interconnect usage charges (IUC) regime.

Gross revenue of the company has also declined to ₹9,607 crore in March quarter as compared to ₹10,894 crore in the December quarter.

The company has attributed the fall in revenues and ARPU to removal of IUC.

The IUC is a charge made by one telecom operator to another when its customers make outgoing calls to the other operator.

On the other hand, the company saw a marginal rise in 4G subscriber base to 11.39 crore as compared to 10.97 crore in the preceding quarter.

EBITDA numbers have gone up to ₹4,408 crore in the March quarter, a rise of nearly 3% from the previous quarter. EBITDA margin has improved at 45.9% from 39.3% in the December quarter. EBITDA is earnings before interest, taxes, depreciation and amortisation.

As per the Telecom Regulatory Authority of India (TRAI), Vodafone Idea had the best voice quality in the country for 6 months consecutively between November 2020 and April 2021.


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