Vodafone Idea net loss narrows in Q4, in talks with investors for funding

CHENNAI:  The last major telecom service provider to release its Q4 FY21 results, Vodafone Idea Ltd. (VIL) reported a sharp narrowing of its losses for the period on Wednesday.

VIL’s total comprehensive income (consolidated net loss) narrowed to Rs 6,985.1 crore during the quarter from the Rs 11,627.7 crore recorded during the corresponding quarter of the previous year. 

However, on a sequential basis, its net loss rose from Rs 4,540.8 crore in the quarter ended December 2020 due to a fall in total revenue from operations—from Rs 10,894.1 crore in the quarter ended December to Rs 9,647.8 crore in the quarter ended March 2021.

It had recorded Rs 11,754.2 crore revenue from operations in Q4 of the previous year. The revenue decline was driven by a fall in average revenue per user (ARPU) due to the removal of the interconnect usage charges (IUC) regime from January.

Under the IUC system, network operators had to pay each other call handling charges depending on whose network the call was originating from.

During Q4, VIL’s ARPU declined to Rs 107 from Rs 121 in the previous quarter.

Adjusted for IUC, ARPU remained flat. 

Debt levels high

More importantly, while the company has managed to narrow its losses, its gross debt levels remain elevated at Rs 1.8 lakh crore comprising deferred spectrum payment obligations of Rs 96,270 crore and AGR liability of Rs 60,960 crore that are due to the Government, and debt from banks and financial institutions of Rs 23,080 crore.

With such high debt levels and significant capital expenditure required for further expansion and upgradation, raising funds remains a critical challenge for the telco. 

Ravinder Takkar, managing director and CEO, VIL, said that the company was currently in “active discussion with potential investors for fund raising to achieve (its) strategic intent”.  

Vodafone Idea is also focusing on cost optimisation, for which several initiatives are already underway, it said.