Vodafone Idea Announces Q1 results!

Vodafone Idea Announces Q1 results!

Last updated: 06 Aug, 2020 | 01:56 pm

Vodafone Idea Announces Q1 results!

  • Massive loss: Troubled telecom firm Vodafone Idea’s net loss ballooned to ₹25,460 crore in Q1FY21, more than 5 times the loss reported in the same period previous year. The telecom firm's revenue from operations declined 5.42% year-on-year to ₹10,659 crore. This is VIL’s eighth consecutive quarterly loss. 
  • Exceptional item: “Vodafone Idea has recognised a charge of Rs 19,440 crore as an exceptional item towards the total estimated AGR liability during the quarter.” This is in addition to estimated recognised liability of Rs 46,000 crore as on March 31, 2020.
  • Subscriber base, ARPU decline: While competitors Bharti Airtel saw their APRU’s rise in the quarter, Vodafone Idea’s ARPU declined to ₹114 from ₹121 in the previous quarter.  The number of subscribers declined to 27.9 crore in June quarter, from 29.1 crore in March-20.

The road ahead for Vodafone Idea

  • Vodafone Idea is fighting for survival as it struggles to raise money to pay dues imposed by a Supreme Court decision in October on how spectrum and other fees are calculated
  • Company’s ability to continue as going concern is primarily dependent on a positive outcome of the application before the Supreme Court for the payment in instalments and successful negotiations with lenders.
  • As per the government, Vodafone-Idea owes Rs. 58,250 crore as AGR dues to the department of telecommunication. Vodafone Idea seeks a 20 year repayment period of these dues from the court.

Vodafone has a total outstanding net debt of Rs. 1.15 lakh crore as of 30th June 2020.  

These numbers are painting an extremely dire picture. Without government support and a fresh capital fusion, it is highly likely that the company would not be able to service its debt obligations in the near future. There remains a high likelihood that the company will either shut operations in India or sell/merge with another party.

Consensus recommendation: Sell (Based on the views of 14 analysts from external research institutions)